US Power Production Milestone As Coal Slips Behind Natural Gas

Coal Slips Behind Gas

It’s been a long time coming, but natural gas officially supplanted coal in the United States power mix, as of April of this year. According to data from the U.S. Energy Information Administration, power plants generated 31% of their electricity from gas and just 30% from coal.

Coal had long been one of the top two energy sources for U.S. power production, but coal use has been on the decline for some time and that trend has accelerated as gas has become cheaper over the last few years.

Coal slumping in the EIA power mix data

For historical perspective, coal represented 45% of the U.S. power mix as little as five years ago. But over the last few years, growing competition from cheap shale gas produced from fracking and a large regulatory burden on coal plants, is putting the squeeze on coal use across the country. Moreover, the trend has picked up pace as gas prices dropped even more over the last 18 months.

Brett Blankenship from research firm Wood Mackenzie argues that the combination of cheap gas and strong environmental regulations including strict limits on mercury emissions from coal-fired plants was having a particularly deleterious effect on coal generation.

“Low gas prices mean coal plants are running less, and when they run their margins are typically compressed,” Blankenship noted, “so companies find it difficult to make the investments needed to comply with regulations and keep those plants running.”

Electric power

The EIA projects that U.S. coal production will drop by 7.5% this year.

In 2009, EIA stats showed 593 coal-fired power plants in the U.S., by 2013 that number was that was down to 518. All 518 plants have a total summer capacity of just over 303 gigawatts.

The move away from the less-environmentally friendly energy source has only accelerated since then. American coal capacity dropped by about 3.3 GW during 2014, and it’s projected to decrease by 12.9 GW this year, as wind power capacity moves up by 9.8 GW and gas by another 4.3 GW.

Somewhat of a seasonal effect

EIA trend data also suggest, however, that electricity generated from coal will recover this fall, as natural gas prices increase seasonally and coal-fired plants come back on line from spring maintenance. For the entire year of 2015, the EIA projects that 35.6% of U.S. electricity will be generated by coal, relative to 30.9% generated from natural gas.

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