ICForecast Energy Outlook Looks beyond the Wicked Winter of 2014 *Coal Generators Expected to Run with Higher Capacity Factors *Natural Gas and Power Prices Firm into the Next Decade Business Wire FAIRFAX, Va. -- March 18, 2014 ICF International (NASDAQ:ICFI), a leading provider of consulting services and technology solutions to government and commercial clients, has released its ICForecast Energy Outlook for the second quarter of 2014. The study highlights the near-, mid- and long-term future of gas, coal and power prices; the impacts of proposed U.S. federal environmental regulations; and projections on pollution control installations, coal production, and renewable energy development. This winter’s weather demonstrated the continuing importance of weather as a near-term driver of natural gas prices. Frequent cold snaps led to both higher gas prices and increased price volatility. The ICForecast Energy Outlook projects gas prices based on the assumption of “normal” (20-year average) weather, anticipating larger seasonal price spreads than indicated by the futures market earlier this year. Due to the increased need for storage refill this spring and summer, the impacts of winter 2014 are likely to persist through the remainder of the year. Following the continued decline of gas-directed drilling activity last year, drilling is likely to increase in response to the recent surge in gas prices. The regulatory forces that are driving coal retirement announcements continue to build, with the U.S. Environmental Protection Agency (EPA) expected to release a proposal for CO regulation of existing generators in June. Building on its Mercury and Air Toxics Standards and expectations for final ash and water intake structure rules, EPA’s new rule could lead to incremental announcements over the next five years. ICF’s retirement projection for U.S. coal plants remains steady in the range of 65 GW by 2020, based on a regulatory portfolio that includes CO and EPA’s other proposed regulations. Natural gas-fired units will fill the gap caused by the coal-fired generation retirements as well as meeting incremental demand growth going forward. Over the next 25 years, natural gas-fired units will increasingly move into the base load across most markets in the U.S. Going forward, as gas increasingly sets the margin over all hours, even in historically coal-dominant regions such as the Midwest and Southeast in the U.S., energy prices will firm and implied heat rate spreads across the nation will tighten. The Marcellus, located in the Northeast U.S., and Eagle Ford, located in South Texas, continue to be the “hot spots” for drilling activity. Dry gas plays such as Haynesville, located in Southwest Arkansas, Northwest Louisiana and East Texas; and Fayetteville in Arkansas, will look increasingly attractive as gas demand and gas prices continue to firm through the end of the decade. ICF expects prices to firm between 2015 and 2020 as demands from new petrochemical plants, liquefied natural gas export terminals and pipeline exports to Mexico start ramping up.These new demands, combined with a continued rise in gas use for electric generation, will place significant upward pressure on gas prices and increase the potential for price volatility through the end of the decade. In the near term, the cold winter and increases in natural gas prices are boosting coal consumption, which will provide support for higher coal prices.However, over the next five years, coal consumption is expected to remain flat, with the biggest hope for producers being the export market. Despite periodic signs of life, international coal prices remain depressed, which makes U.S. coal less competitive and will reduce U.S. exports in 2014 compared with the record high exports in 2012.Exports areexpected to rebound, but it will take longer than expected with the continued low global demand.With gas prices expected to remain competitive for the next several years and electric load growth at moderate levels in many areas, U.S. coal demand will remain flat in the near- to mid-term with a gradual decline starting in 2020. Coal demand will remain flat despite the expected coal retirements through 2016 as ICF expects the remaining coal plants to run at higher capacity factors. Wind energy development slowed significantly in 2013 as compared to previous years.Nonetheless, new wind energy projects that began construction in 2013 are still eligible for the Renewable Electricity Production Tax Credit and will push to come online by the end of 2015 in order to maintain eligibility. The expiration of the credit will constrain opportunities for the development of central station generators, however, demand to meet renewable portfolio standards requirements will drive development opportunities in select regions.The ICForecast Energy Outlook provides insight into development trends for central-station wind, solar and other renewable energy generation. “Regulation of CO from existing sources will cause companies to consider incremental retirements and investments while recent weather and the resulting gas price response make them reconsider past retirements,” said Chris MacCracken, principal for ICF International. “The ICForecast Energy Outlook reports on the balance points among regulation, power and fuel markets to provide insights critical to owners, investors and other market participants over a 20-year time horizon.” The ICForecast Energy Outlook addresses a number of significant issues, including: *The progress of existing regulatory issues and their impact on power and fuels markets *ICF’s views on natural gas demand to 2037 and how that affects power and other markets *Coal pricing, retirements and regulation effect on generating markets *Power market supply/demand trends and future pricing effects *Renewable energy and the effect of not having long-term energy policy certainty *How U.S. coal supply/demand dynamics affect the export market Using a suite of proprietary analytical tools and by incorporating global expertise from all areas of the industry, ICF utilizes a fully integrated assessment of wholesale power, transmission, fuel and emissions markets in order to offer the most complete picture of the energy industry. The ICForecast Energy Outlook offers insight into the key areas of emissions, gas, coal, renewable energy and power. For More Information *ICF Integrated Energy Outlook *ICF Energy About ICF International ICF International (NASDAQ:ICFI) provides professional services and technology solutions that deliver beneficial impact in areas critical to the world's future. ICF is fluent in the language of change, whether driven by markets, technology, or policy. Since 1969, we have combined a passion for our work with deep industry expertise to tackle our clients' most important challenges. We partner with clients around the globe—advising, executing, innovating—to help them define and achieve success. Our more than 4,500 employees serve government and commercial clients from more than 60 offices worldwide. ICF's website is http://www.icfi.com. Caution Concerning Forward-looking Statements Statements that are not historical facts and involve known and unknown risks and uncertainties are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Such statements may concern our current expectations about our future results, plans, operations and prospects and involve certain risks, including those related to the government contracting industry generally; our particular business, including our dependence on contracts with U.S. federal government agencies; and our ability to acquire and successfully integrate businesses. These and other factors that could cause our actual results to differ from those indicated in forward-looking statements are included in the "Risk Factors" section of our securities filings with the Securities and Exchange Commission. The forward-looking statements included herein are only made as of the date hereof, and we specifically disclaim any obligation to update these statements in the future. Contact: ICF International Erica Eriksdotter, +1 703-934-3668 firstname.lastname@example.org
ICForecast Energy Outlook Looks beyond the Wicked Winter of 2014
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