The following article originally appeared in the June 2012 issue of Black & Veatch Energy Capital Markets Report and is reprinted with permission of Black & Veatch. Copyright 2012. All rights reserved.
The US Energy Information Administration recently reported that for the first time since the agency began tracking monthly statistics, April saw natural gas and coal with the same share of total net generation of electricity – 32%. In addition to market share, coal and gas prices have been moving closer together, sometimes reversing position, for almost two years.
The share-of-generation statistics were published in EIA’s Electric Power Monthly for April, released on June 27. In March, coal’s share was 34%, up to then, the lowest level since January 1973, when the statistics were first compiled. Coal-fired generation was 95,982 gigawatt hours in April, down 22.8% from the 124,293 GWh generated by coal in April 2011, EIA said.
Natural gas-fired electricity was 95,882 GWh in April, 35.9% higher than the 70,529 GWh produced in April 2011. . . . For many years, coal accounted for half or more of total electricity production while the share for gas was roughly around 18% to 20%. For the past couple of years, however, coal and gas prices, as measured by the spot month futures contracts expressed in dollars per million British thermal units, have been moving closer together, mainly as gas prices have fallen. On January 17 this year, the lines on the graph finally crossed and gas prices moved lower than coal. The relationship has since reversed, but at the end of June, coal was still 83% of gas.