Thermal Power

14 Aug 2020

Natural Gas Leads US Power Generation in H1

14 Aug 2020  by Kallanish Energy   

Cheaper U.S. natural gas prices helped the U.S. Lower 48 states to increase gas-fired power generation by 9% year-on-year in the first half of 2020, the EIA said on Wednesday.

Power generation fueled by natural gas increased nearly 55,000 gigawatthours (GWh) in the period. At the same time, coal-fired powergen plunged 30%.

Recent low gas prices made coal an uneconomical option, accelerating the coal-to-gas switch mostly in the PJM Interconnection (which covers an area from New Jersey to Illinois) and the Midcontinent Independent System Operator (which includes primarily areas in the Midwest.

According to the EIA, the Henry Hub spot gas prices averaged $1.81 per million British thermal units (MmBtu) through the first half of 2020. In comparison, delivered price for coal was $1.91/MmBtu.

Overall, total U.S. power generation declined 5% in the first six months of the year, compared to a year earlier. This was mainly due to the reduced business activity led by Covid-19 mitigation efforts.

A summer seasonal peak was reached on July 28, when gas-fired power generation reached record-high levels. The boost in gas consumption in the electric sector is also down to capacity additions.

Other than natural gas, renewables was the only other fuel source to grow in H1 at about 5% year-on-year. Nuclear power generation was down 4% y-o-y.

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