NRG Chief: Shale rush will create a “gas driven world”

The shale rush is moving the nation into a “gas driven world,” NRG Energy chief David Crane said Thursday at the IHS CERAWeek energy conference in downtown Houston.

During a discussion on the future of electricity generation in North America, Crane minimized the role of EPA carbon regulations in forecasting a move away from coal-fired power. He predicted “a mass retirement of coal plants” in competitive markets, as companies switch from coal-based generation to natural gas-based generation. But the switch will be driven by economics, not just regulatory compliance, he said.

“I don’t know how you put any money into the back end of a 40-year-old coal plant when gas is being offered up at $2.50,” he said. “In competitive markets, I see gas first sweeping coal and then, starting in 2020 as nuclear plants come up for relicensing, gas will sweep nuclear.”

He said the company has responded to carbon reduction regulations and shareholder pressure through solar power investments. Crane noted that NRG’s most recent solar panel purchase cost 70 cents per watt, down from $4.50 a watt in a few years.

He said land requirements and the growing size of turbines turned the company off of wind.

“It seemed to us the wind industry was going to end up in Dakotas,” he said. “But the buffalo don’t use that much electricity, so we shifted to solar.”

However, Michael Morris, non-executive chairman of American Electric Power, defended the future of the coal industry, saying it will be buoyed by growing world demand for power.

“Coal is not going to go away,” he said. “The world market for coal is growing exponentially and it will continue to do that.”