Atomic - How the Nuclear Power Meltdown Will Help U.S. Natural Gas Producers

Gas-fired power generation in the U.S. has been making impressive gains lately and that trend looks likely to continue. Power demand is growing quickly and generation fueled by cheap natural gas is taking an ever-increasing market share of the new and existing load from more expensive generators like coal and nuclear, which is leading significant numbers of those plants to shut down. The Energy Information Administration (EIA) earlier this year forecast that combined-cycle, gas-fired generation capacity could rise by 6.1 GW between now and 2020, which ­— if fully called upon — would equate to roughly 1 Bcf/d of gas demand. That growth would displace some older gas-fired generation but also fill the void left by retiring coal-fired and nuclear power generators — two sectors EIA expects to decline over the next couple of years by 14.1 GW and 1.7 GW, respectively. What’s more, surging gas production and rapidly filling pipeline expansions in recent months suggest that gas-fired generation demand may be growing even faster than expected. Today, we take a look at how gas generation has been besting coal-fired plants on fuel costs in recent years, and at the string of nuclear and coal-fired generators that are being permanently retired.

Appalachia — the U.S.’s leading gas production region — is also one of the last bastions of coal country in the broader Northeast. That dual reality makes it one of the remaining pockets in the region where there is significant potential for upside in natural gas demand for power generation. Gas burn for power in the Appalachian states — Pennsylvania, Ohio, West Virginia and Kentucky — surpassed power burn in the northern Mid-Atlantic market (New York/New Jersey) in 2017 and led the growth in overall Northeast power burn in 2018. The availability of consistently low-priced gas in recent years has hastened the retirement of coal-fired and nuclear generation plants in the shale producing region and fueled the addition of combined-cycle gas-fired generators, with more scheduled to come online soon. Today’s blog looks at recent and upcoming changes in the Appalachian generation fleet, and their implications for gas demand growth.

For a few years now, U.S. natural gas producers have benefited from the electric-power sector’s shift from coal-fired plants toward gas-fired ones. The ongoing transition makes sense. Not only is gas-fired generation cleaner, it’s mostly been cheaper than the coal alternative. Better still, gas turbines and combined-cycle plants are very flexible companions to all those new wind farms and utility-scale solar facilities, whose variable output requires at-the-ready replacement power when the wind’s not blowing and the sun’s not shining. But with the continued push by many state regulators — and many utilities — for lower-carbon generation fleets, gas-fired plants are facing a growing challenge from energy storage, mostly in the form of very big lithium-ion batteries. Today, we look into the increasing use of large-scale batteries in utility settings and whether they might pose a serious threat to gas-fired power in the 2020s and beyond.