A White Stallion falls in the mud….

In the end, it was the market, not the protests, that stopped White Stallion (AP)

Developers of the White Stallion Energy Center, a coal plant slated for construction in Matagorda County, have officially thrown in the towel, the latest in a string of coal projects that have fallen victim to market forces.

White Stallion’s backers, as late as the middle of last year, were trying to blame its travails on the Environmental Protection Agency, but what really hobbled the project was weak natural gas prices.

As I noted in an earlier column:

In Texas, the wholesale price for electricity is essentially tied to natural gas under the state’s deregulation law. That used to mean coal plants were a license to print money, because coal cost much less than gas as a generating fuel. So coal-fired generators could produce power at a lower cost and sell it into the wholesale market at the higher gas price.

That’s no longer the case. As natural gas prices have fallen, the market economics have flipped. It’s now cheaper to run natural gas-fired plants than coal, leaving companies like White Stallion on the wrong side of the market.

White Stallion Chief Operating Officer Randy Bird acknowledged the realities in announcing the project’s demise, saying that “the presently low price of natural gas has made the price of electricity from a new coal-fired generator uncompetitive at this time.”

While White Stallion also ran afoul of EPA rules for mercury releases, toxic pollutants and carbon emissions, the far bigger problem is the failure of the deregulated electricity market to encourage the development of new generating capacity.

With the state facing a shortage of new generation, developers are unable to secure the financing they need because of the market’s structure. White Stallion had the additional problem of being on the wrong side of the price curve for fuel.

An idea that may have looked smart five years ago had simply become uneconomic today thanks to the glut of natural gas unleashed by the hydraulic fracturing boom.