EIA: Natural gas-fired power generation to decrease; coal generation to increase

The U.S. Energy Information Administration expects power generated from natural gas to decrease over the next two years as the power generated from coal increases over the same time, caused largely by the increasing cost of natural gas relative to coal.

The administration’s Short-Term Energy Outlook for February states that the share of electricity generated by natural gas is expected to fall from 30.3 percent in 2012 to 27.6 percent in 2014. Over the same time period, the administration expects coal-fired power generation to rise from 37.4 percent to 39.1 percent.

Although EIA expects coal consumption in the electric power sector to increase to 859 million short tons in 213 and 870 MMst in 2014, the consumption will remain significantly less than the 1,003 MMst averaged during 2000 to 2009.

The STEO also shows a steady decrease in natural gas used for power generation, predicting the number to decrease from 25.0 billion cubic feet per day in 2012 to 23.1 Bcf/d in 2013 and 22.6 Bcf/d in 2014.

“Consumption over the forecast period is less than the record-high 2012 levels, but remains high by historical standards and reflects an ongoing structural shift toward using more natural gas for power generation,” the report states.

The administration predicts the price of natural gas to increase from its 2012 average of $2.75 million metric British thermal units at the Henry Hub to $3.53 per MMBtu in 2013 and $3.84 per MMBtu in 2014.

The report also shows a growth in renewable energy sources, stating that generation from renewable energy sources other than hydropower exhibited the highest rate of growth among all generation sources in recent years and predicting similar growth to continue during the next two years. EIA estimates more than 12 GW of new wind power capacity was added during 2012, with about 40 percent of that coming online in December before the end of year deadline for a federal production tax credit. The credit has been extended for another year.

“EIA currently estimates that wind capacity will increase by 7 percent in 2013 and by 10 percent in 2014,” the report states. “However, electricity generation from wind is projected to increase by 15 percent in 2013, as capacity that came online at the end of 2012 is available for the entire year in 2013. Wind-powered generation is projected to grow by 8 percent in 2014.”

Despite the additional generation in renewable energy sources, lower levels in the water supply of the Pacific Northwest cause a 13 percent drop in hydropower production and offset the growth in other renewable energy sources, leading to a drop of 2.0 percent in total renewable energy consumption in 2012. The administration expects renewable energy consumption to increase by 2.6 percent in 2013 and 4.1 percent in 2014 as increases in renewable energy sources other than hydropower continue.

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