June 4, 2012 / 4:10 PM / in 7 years

Coal loses steam as power fuel-Black & Veatch survey

HOUSTON, June 4 (Reuters) - U.S. power industry executives see a rapid decline in the role for coal-fired power plants in coming years as the changing economics for natural gas make the cleaner and abundant fuel an affordable and attractive alternative, according to a survey from Black & Veatch’s management consulting division released on Mo nda y.

Only 58 percent of the executives and managers surveyed by Black & Veatch said coal has a future in power generation, down from 81 percent surveyed a year ago who said coal had a future when “fiscal realities were fully considered.”

Fifteen percent of the respondents said coal is rapidly fading in importance as a power generation fuel and 17 percent said its role will be limited to overseas markets.

The slide in industry support for coal was dramatic, said John Chevrette, president of Black & Veatch’s management consulting division.

Black & Veatch is a worldwide engineering, construction, consulting and management company based in Overland Park, Kansas.

“People are really beginning to fundamentally rethink their resource portfolio and what role coal will play,” Chevrette told Reuters.

While some utility managers have questioned coal as a fuel of choice for some time due to growing environmental concerns, “they were reluctant to be particularly bearish because the economics of coal were so compelling,” he said.

But abundant supplies of natural gas at the lowest prices in a decade, coupled with a slowdown in technology that promised cleaner-burning coal plants, has dampened remaining support for coal, “at least for now,” Chevrette said.

Black & Veatch`s sixth annual Strategic Directions in the U.S. Electric Utility Industry Report said a variety of factors - from electric vehicles to renewable energy growth to water supply issues - are beginning to change how the industry operates.

“Utilities are evolving in a manner that will redefine core functions such as power production, distribution and customer service,” Chevrette said. “Driven by new technology and regulatory shifts, we are seeing the impact across all aspects of the electric industry.” (Reporting By Eileen O’Grady in Houston; Editing by Marguerita Choy)

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