Market forces are driving an overhaul of power generation capacity in Texas — the largest electricity-consumer in the U.S. Oversupply and low power prices have increased competition for the state’s power generators, forcing them to shut down older or less efficient plants or plants burning more expensive fuels. Just last month, Vistra Energy — the state’s largest provider of coal-fired generation — announced plans to shut down more than 4.0 GW of coal-fired generation capacity by early 2018, the equivalent of nearly one-fifth of the state’s total coal-fired generation capacity as of August (2017). At the same time, generation capacity for natural gas, wind and solar-sourced power are on the rise. Today, we look at the latest power generation trends in Texas and their potential effects on gas demand.
Market economics, and to some degree federal environmental rules, have been forcing U.S. power generators to rejigger their fleet of generation plants for some time now. It’s not unusual for utilities to retire older, less efficient plants and bring on new, more efficient and economical plants as better technologies becomes available. But in the past decade, that turnover kicked into overdrive as the Shale Revolution dramatically increased the availability and reduced cost of one of the primary fuels used to generate power — natural gas. Lower-48 gas production has surged from around 50 Bcf/d 10 years ago to more than 70 Bcf/d now, while national average spot gas prices have dropped from upwards of $5.00/MMBtu prior to 2010 to $2-3/MMBtu in recent years. This has happened at the expense of another major generation fuel — coal.
That’s because utilities practice economic dispatch — firing up the least expensive units first and the most expensive units last — with the economics being highly sensitive to the variable cost of the resource required to run the plant. We’ve discussed this in previous blogs on the topic — Talkin’ ‘Bout My Generation, Switching On a Dime and Torn Between Two Fuels, to name a few. But, in short, baseload generation — the minimum required by the grid around the clock — is served by the consistently least expensive, most reliable generators, which is usually nuclear plants. Traditionally, the next-cheapest power after nukes has come from coal-fired plants, followed by natural gas. But as gas supply surged and gas prices fell, economics began to favor gas over coal and prompted utilities to use a lot more of their existing gas-fired power generating units as well as to build more gas-fired generation capacity. Coal prices fell too, in response to the stiffer competition from gas. But because of regulatory pressures to burn lower-emission fuels, lower coal prices were not enough to prevent a lot of coal-to-gas switching in the power sector. Moreover, the lower price environment in some cases led to coal producers either temporarily or permanently shutting down mining operations and further reducing coal supply, and coal-fired power plants followed suit.
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About the song
"You've Got the Power" was co-written by James Brown and Johnny Terry (of Brown’s back-up band, The Famous Flames) and first appeared on Brown's third album — Think. It featured a duet between Brown & singer Bea Ford. The song "Think" was written by Lowman Pauling of the 5 Royales, who had released it as a single first in 1957, where it rose to #9 in the R&B charts. James Brown released "Think" as a single in 1960, where it hit #7 on the R&B charts, and #33 on the pop charts.
DJ's started giving "You've Got The Power" — which was on the B side of "Think" — some spins, and it soon rose to #14 on the R&B charts and #86 on the pop charts, making it Brown's first B-side hit. It was also featured in a medley on the smash hit 1963 album James Brown - Live at The Apollo.
Dubbed "The Godfather of Soul", Brown's appearances on Ed Sullivan and American Bandstand, and his infamous appearance in the 1964 movie "The T.A.M.I. Show" helped fuel the string of hits in the ‘60s. “The T.A.M.I Show” was also where he debuted his performance of being escorted off the stage by an attendant draping a cape over his shoulders during "Please, Please, Please,” only to break away and run back to the microphone and continue singing.
Brown was inducted into The Rock & Roll Hall Of Fame in 1986, and The Famous Flames were inducted in 2012. James Brown passed away in 2006.
