Entergy plan looks to replace aging gas fleet

OREANDA-NEWS. March 13, 2015. Entergy's Louisiana utilities expect to need 8,000MW of new generating capacity in the next two decades to replace about half of their aging power-plant fleet while also meeting a boom in industrial demand.

Entergy Louisiana and Entergy Gulf States Louisiana plan to rely almost exclusively on natural gas-fired generation to meet their capacity needs, according to an integrated resource plan under state regulatory evaluation. The utilities plan to study the use of renewable resources and efficiency programs.

The two utilities, which are seeking permission to merge, have 10,915MW of generation and capacity under long-term contract. About 53pc of that capacity is from older gas-fired capacity that Entergy expects to shut in the next 20 years.

Entergy anticipates losing 6,100MW through unit deactivation, while also losing about 700MW from units it shares with an affiliate utility in Texas when contracts terminate in 2018. The integrated resource plan does not identify specific plants expected to close, but Entergy said half of its portfolio has been in service for 40-60 years.

"Many of these generators are assumed to deactivate over the planning horizon and these unit deactivations are a significant driver of the companies' need for additional generation regardless of any assumed load growth," Entergy said.

The utilities expect to keep 399MW of coal-fired capacity and 1,999MW of nuclear capacity.

Entergy projects 1,600MW of new demand through 2019. Much of the new load will be in Louisiana at large petrochemical complexes and LNG export terminals.

The study outlines four scenarios for growth, including currently identified load growth, a "business-boom" outlook that envisions low gas and coal prices; a scenario of high gas prices leading to increased distributed generation and lower demand growth; and a scenario of higher fuel prices, more subsidies for renewable generation and strict CO2 limits.

Under the scenarios, Entergy expects that peak power demand in 2034 will increase by at least 1,507MW and up to 2,626MW. With the expected plant shutdowns, the utilities could be short as much as 10,000MW in the most extreme "business boom" scenario.

The resource plan modeled a range of gas prices, from \\$3.66/mmBtu to \\$8.08/mmBtu in 2014 dollars. The reference plan price for gas was \\$5/mmBtu. The reference plan assumes a cap-and-trade program starting in 2023 with emission allowance of \\$7.54/ton of CO2.

Entergy's plan calls for boosting its supply with 816MW from the proposed purchase of the 1,980MW Union Power Station; completing a solicitation for a new combined-cycle power plant in the Amite South region; pursuing 800-1,000MW of new gas capacity to serve Lake Charles; and several new peaking gas plants and purchased power contracts.

Gas additions are the most attractive, Entergy said, while more study is needed to better understand the performance of renewable resources.