Gas vs. Coal, revisited

Low gas prices allow plants to curb coal-powered generation

2015 marked the first time that natural gas generation of electricity outpaced that of coal generated electricity multiple times in a calendar year.

Natural gas-generated electricity, such as the kind at this plant, has seen a recent upsurge.

Natural gas-generated electricity, such as the kind at this plant, has seen a recent upsurge.

The EIA (Energy Information Administration) reported this uncommon occurrence in a July report from last year, after noticing the trend in consecutive months.

Gas outpaced coal-fired generation three times last year, most recently in August. This was primarily due to the drop in gas prices. According to Argus Media, Henry Hub gas trading in December decreased 48% from the previous year’s levels. Such record changes will potentially allow utilities companies and others with large generators to switch their fuel source, even during the cold winter months.

It is not uncommon for coal-to-gas switching to occur during other months; the milder seasons allow utilities companies to schedule maintenance and lower output rates typically during the months of April and May as well as September and October. However, in accordance with last year’s novelty gas generation numbers, we could very well be seeing a recurring theme come this year that would even translate to coal-to-gas switching in other, more severe months.

EIA chart

An EIA chart shows how natural gas closed the gap in 2015.

 

Despite the Argus report’s findings, it also shows that the continued lows for gas are not to be expected, including analysis that suggests most utilities are close to reaching a ceiling on how much gas they can utilize. FirstEnergy Capital analyst Martin King is quoted as saying “At these price levels, every available gas-fired power plant that can burn gas for economic and grid availability reasons is doing so,” and that “Additional gas burn with lower prices is unlikely.”

On the flipside, coal’s long-term outlook is expected to be one of imminent decline. Robert Walton of Utility Dive contends that “carbon regulations under the Clean Power Plan, finalized last year, would make it nearly impossible to build new goal generation facilities without expensive pollution controls if the rules are not overturned in court.”

Coal-generated electricity is generally viewed as being on the decline. But will it always be necessary due to the high prices of alternatives?

Coal-generated electricity is generally viewed as being on the decline. But will it always be necessary due to the high prices of alternatives?

Advertisements

No comments yet... Be the first to leave a reply!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: