Tom Sanzillo, IEEFA’s director of finance, said at an Energy Finance 2016 panel this afternoon that coal-fired electricity will continue to lose market share in the U.S.
He said in the meantime coal companies will seek through bankruptcy to shed debt in hopes of a market recovery that will not come.
Sanzillo said the U.S. coal industry continues to be battered by capital flight as investors abandon the sector. “Private equity is in and out, hedge funds are just bottom feeders, capital markets are leaving.”
He said the coal industry generally will continue to be pressed by environmental regulatory issues (“Mother Earth isn’t going anywhere”) and that public service commissions will become increasingly hostile to coal-plant subsidies (“the PSCs have to figure out whether they want to keep overpaying for electricity”).
While coal industry executives continue to “think the markets will turn around,” recovery is highly unlikely.
Bankrupt coal companies, Sanzillo said, “will continue to be overvalued” even after restructuring.
“The price of coal will stay low for a very long time, maybe even lower than it is now.”
