In April of this year natural gas-fired electric power generation overtook coal-fired generation. This is a first, reflecting a significant rise in natural gas generation – a 40 percent increase from 2008 to 2012. The decline in coal-fired electricity generation was even more pronounced – a 67 percent decline over the same period. The chart below is from the Energy Information Administration (EIA).
Natural gas use for industrial, on-site electricity generation also grew: from 52 percent in 2005 to 58 percent in 2011.
Over the summer of 2012 natural gas’ share dropped slightly below coal’s as both coal and natural gas generation jumped in response to the summer heat.
Low natural gas prices are the primary reason for its increase in electricity generation. This means that the fuel mix could shift back to coal as mounting coal stockpiles push down coal prices.
Over the long term natural gas is expected to continue to grow relative to coal because of the huge growth in natural gas generating capacity: it has almost doubled since 2000. This trend should continue even if natural gas prices rise.
For those of you who do not track natural gas prices here are the EIA statistics and projections: Natural gas prices averaged $4 per million British thermal units (MMBtu) in 2011, and are projected to average $2.71 per MMBtu in 2012 and $3.35 per MMBtu in 2013.
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