Electricity generation

Renewable and hydroelectric generation has chomped away at natural gas market share of total power generation along the West Coast this year. The latest electric generation data from the Energy Information Administration shows power sourced from renewables (not including hydro) in California, Oregon and Washington combined in April 2017 through July 2017 edged up about 1% year-on-year, while hydroelectric generation averaged 23% higher year-on-year. At the same time, natural gas-fired generation fell 16% year-on-year. The reduced gas-fired generation demand, along with reduced gas storage capacity in the West, has displaced natural gas from the region and disrupted recent gas flow patterns. These shifts provide a glimpse of what gas flows and pricing dynamics could look like as more renewable capacity is added. In today’s blog, we analyze the effects of electric generation trends on regional gas flows.

The rise of renewable energy has transformed power markets in the U.S. West Coast states, particularly California. The Golden State has added significant renewable power generation capacity in recent years. Additionally, record precipitation in the Pacific Northwest and California this year boosted hydroelectric generation in the region. These factors have reduced the natural gas market share of power generation in California and other Pacific Coast states, which has important implications for the U.S. gas market as a whole, especially considering that the Eastern U.S. is increasingly oversupplied and pushing its gas supply westward. Today, we look at the year-on-year changes in the West Coast power generation sector and their effect on the gas market this summer and longer term.