Direct Energy Business
Market Data For Your Home Contact Us

Natural Gas Tops Coal Generation for Second Time

read | Share:

Natural gas-fired electricity generation in the United States has grown significantly in recent years.

But, how much has it actually grown? 

Recently, the U.S. Energy Information Administration (EIA) shed light on the increase of natural gas generation nationwide. In the most recent Electricity Monthly Update, the EIA found that natural gas surpassed coal in monthly net power generation for the second time in history. The analysis — which examined coal and natural gas generation by U.S. region in July 2014 and July 2015 — found that natural gas fueled 35 percent of U.S. electricity demand this past July, narrowly edging out coal's share of 34.9 percent. 

The table and map below help illustrate the analysis. In July 2014, coal still maintained a significant edge over natural gas generation — about 36 billion kilowatt-hours (kWh). However, from July 2014 to July 2015, coal generation fell 11 billion kWh to 139 kWh while natural gas generation rose 26 billion kWh to 140 kWh. 

What can help explain the shift? Two main factors: the decline of coal-fired generation due to new regulations and historically low natural gas prices across the country. As the report aptly notes, the monthly average price for natural gas at Henry Hub — which is a natural gas benchmark — decreased from $4.14 per million Btu (MMBtu) in July 2014 to $2.91/MMBtu in July 2015. In September, the average price of natural gas fell even further to $2.72/MMBtu. 

Though it was only the second time natural gas has supplanted coal's share of generation, experts believe it is indicative of a major emerging shift in U.S. power generation as coal plants continue to close, and natural gas and renewable generation continues to rise. 

For more expert insights on energy prices and power generation, be sure to sign-up for our Daily Market Updates and check out our Weekly Energy Market Update video

Posted: October 15, 2015