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Coal Makes Comeback in U.S. Power Generation

Higher natural gas prices cause utilities to burn more polluting coal



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Higher natural gas prices during the first half of 2013 prompted electric utilities to curtail their use of gas-fired generators by 14 percent, according to findings published yesterday by the Department of Energy.

Much of that lost gas generation was made up with coal, which has witnessed a modest recovery since late 2011 and early 2012, when record-low gas prices prompted many utilities to ramp down their coal-fired boilers in favor of gas, which burns more cleanly and emits far less carbon dioxide than coal.

For the first six months of 2013, natural gas accounted for nearly 633 million megawatt-hours of U.S. electricity generation, down from 735 million MWh during the period of January to July 2012. Coal-fired generation, meanwhile, jumped 7.5 percent, from 854 million to 918 million MWh, over the same periods.

In April 2012, natural gas for the first time achieved near-parity with coal for power generation, with each fuel accounting for just under 100 MWh of generation, according to the Energy Information Administration. By contrast, in July 2011 coal accounted for roughly 180 million MWh of generation, while gas produced 120 MWh.

While gas had gradually increased its market share for power generation since 2009, when the domestic shale gas explosion began to be felt across utility markets, a more pronounced shift occurred after August 2011, when utility-delivered prices for natural gas fell below $5 per thousand cubic feet, according to EIA data. That downward price pressure continued until April 2012, when utility-delivered prices bottomed out at below $3 per thousand cubic feet.

Trend began last summer
Coal began regaining its footing by the summer of 2012, and the gap between coal and gas considerably widened last fall and early this year, according to EIA. In January, for example, coal accounted for nearly 140 million MWh of generation, while gas hovered at about 90 million MWh.

In the same month, natural gas deliveries to electric utilities averaged $4.56 per thousand cubic feet, the highest monthly average since September 2011.

"In some regions, such as the Southeast and mid-Atlantic, natural gas use for power is significantly lower in 2013," EIA analyst Mike Ford wrote in a "Today in Energy" report published on the agency's website. "This larger drop is because natural gas made greater inroads in 2012 compared to regions like Texas where low natural gas prices in 2012 did not displace nearly as much coal-fired generation."

Yet even with the widening gap, gas in January remained near the top of its four-year range for total megawatt-hours generated, while coal was still lagging in its four-year consumption average. By July, the gap had narrowed considerably, and use of both coal and gas was up as the country entered its peak demand months for electricity, according to EIA.

Other fuels that helped to displace natural gas in the first six months of 2013 were wind, solar and biomass power, which surged 15.2 percent over the first six months of 2012. Such renewables accounted for 150 million MWh of generation during the first six months of 2013, compared with 130 MWh for the same six months of 2012, according to EIA.

"The amount of natural gas burned for electric generation was sharply lower in 2013 compared to 2012 at average daily regional temperatures above 60 degrees Fahrenheit," EIA said. "However, natural gas use for power in 2013 remains above the 2009-11 average for all temperatures."

Reprinted from Climatewire with permission from Environment & Energy Publishing, LLC. www.eenews.net, 202-628-6500

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