For the first time ever, U.S. natural gas-fired power plants are routinely generating more electricity than their coal-fired counterparts, at least during the spring, summer and fall. Prior to 2015 coal held a clear lead over natural gas in power generation but last year they were neck and neck at 33% of fuel consumed for power generation according to the latest Energy Information Administration (EIA) statistics released Friday (February 26, 2016). This is partly due to tightening federal environmental rules, but another major driver is very low natural gas prices, which have been averaging below $2/MMBtu. Coal prices have been falling too as coal markets respond to stronger-than-ever competition from gas, but not enough to prevent a lot of coal-to-gas switching in the power sector. Today, we update last fall’s analysis of the death-match battle between coal and natural gas with a look at how persistently low gas prices may keep gas on top.

SCHOOL OF ENERGY HOUSTON!
Register Now! Early Bird Discounted Rate Ends In 4 days!
RBN's School of Energy Spring 2016 with CPE Credits And Our Full Energy Curriculum.
Houston - April 6 - 7, 2016
Registration includes an invitation to RBN’s First Annual Crawfish Boil on April 6… details coming soon!
In April 2015, U.S. power plants fired by natural gas produced more electricity than coal-fired plants—that had never happened before. Coal retook the lead in May and June, but since then gas has remained on top, and in some months gas’s edge over coal has been significant. In October, for example, gas-fired units generated 35% of the nation’s power, compared with 31% for coal, and in December--the latest month for which EIA statistics are available—the score was gas 34%, coal 28%. What a difference a year makes. In October 2014, coal-fired generation held a huge 38%-to-27% edge over gas, and the following month coal’s margin over gas was a still-significant 35% to 31%. As we discussed back in September 2015 – the last time we looked at the contest (see Torn Between Two Fossil Fuels) - as recently as 2008 coal-fired units were producing more than twice the electricity that gas units did. Since then, U.S. production of natural gas has continued growing, natural gas prices (which spiked to more than $13/MMBtu in 2006) have fallen (and become less volatile), and federal rules on power plant emissions have been tightened considerably, with possible implementation of the Environmental Protection Agency’s (EPA) Clean Power Plan (CPP)—a potential game-changer for coal and gas—looming.
Join Backstage Pass to Read Full Article