The Current Generation Supply/Demand Imblance
With respect to these fundamental economic drivers:
- Capacity surplus hurts coal too, our analysis shows that:
New coal plants can “survive” and support financing in a soft market
But, achieving attractive equity returns requires
- Very good fuel economics (very low cost coal)
- Very good site and transmission economics
- Better than average supply/demand situation
Thus, our conclusion is that
- Many announced coal plants will wither on the vine
- However, a handful of very well situated plants deserve to go forward and will
These will come on-line in ’05 and beyond