We’re on the cusp of the end of an era in the energy sector…
Dry Fork Station, near Gillette, Wyoming, may go down in history as the last coal-fired power plant created in America.
According to a recent report from the climate policy think tank Energy Innovation, it is the only coal plant that produces electricity at a lower cost than new renewable power plants like wind or solar. The analysis takes into account newly available tax credits from the recently passed Inflation Reduction Act.
Dry Fork Station began commercial operations in 2011. It’s one of the newest, most technologically advanced coal power plants, designed to comply with strict environmental rules.
In many ways, it’s a marvel of modern engineering, with scrubber systems that pull pollutants like sulfur and mercury out of the air before they’re released through the chimney.
It’s located right next to a mine that provides coal through a conveyer system, virtually eliminating fuel transportation costs. It even reuses its coal ash, a waste product that older power plants used to dump into toxic holding ponds.
But despite all those advantages, electricity from Dry Fork Station – which costs $16.64 per megawatt-hour – would only be 32 cents cheaper than the operating cost of a brand-new wind farm. Older coal plants don’t stand a chance.
Coal is on its way out. And many are wondering if natural gas is next on the chopping block.
Here at the Intelligent Income Daily, we’re focused on finding the safest income investments on the market. Companies that own critical infrastructure are often some of the most reliable income producers because their assets last for decades and need to be used every day. But changes in laws and technology can make long-lasting infrastructure obsolete.
Today I want to show you why natural gas will continue to be a critical part of our energy infrastructure even as we move toward more renewable energy sources. I’ll also give you a quick way to add the high yields that come with this sector to your portfolio.
Natural Gas Is Still Essential
Even though coal is no longer cost competitive, utilities aren’t in a big hurry to shut down existing plants.
That’s because coal is the technology behind nearly 20% of the nation’s electricity production. And until enough renewable power – and enough battery storage to handle weather fluctuations – is built, we still need coal to provide baseload power.
Many utilities had planned to eliminate coal from their portfolios by 2030 to 2035. But in many cases, their plans call for it to be replaced by natural gas, which produces fewer emissions while still being able to respond quickly to changes in electricity supply and demand.
Southern Company (SO), for example, is building a new natural gas power plant in Alabama, which it expects to operate into the 2060s.
Duke Energy (DUK) and Dominion Energy (D) are also building natural gas plants in the Carolinas. Even though building new natural gas plants adds carbon emissions, these utility companies plan to meet their climate goals and net zero targets through carbon capture technology.
According to the Energy Information Administration, energy companies plan to build 17 gigawatts of natural gas plants in the next few years, even as coal plants shut down and more renewable power plants come online.
Its long-term forecasts project that domestic natural gas consumption will remain steady through 2050, and exports of liquefied natural gas will nearly double over the next decade.
That means the pipelines that transport natural gas will not become obsolete anytime soon. And, with steady income that doesn’t depend on commodity prices, pipeline companies can be a reliable high-yield income source for your portfolio.
One quick way to invest in pipeline companies is through the ALPS Alerian MLP ETF (AMLP). This ETF holds a basket of midstream master limited partnerships and yields 8%.
In fact, AMLP includes several of the companies that are key components of our Fortress Portfolio service. So even if you are not ready to sign up for Fortress today, AMLP includes the best companies to boost your bottom line.
For those that are interested, Fortress Portfolio is built to withstand market volatility, recessions, record-high inflation, interest rate hikes, and any other economic setback.
In comparison to owning an ETF, by owning individual midstream partnerships in your taxable brokerage account, you can take advantage of distributions that are treated as tax-deferred returns of capital.
To learn more about Fortress Portfolio and safe, high-yielding companies that can boost your income, click here.
Happy SWAN (sleep well at night) investing,
Brad Thomas
Editor, Intelligent Income Daily