For just the second time in history, gas-fired power generation surpassed coal-fired generation in July. That’s according to the short-term energy outlook (STEO) released Oct. 6 by the Department of Energy’s Energy Information Administration (EIA).
The first time gas-fired generation topped coal was in April 2015.
Per the STEO, natural gas fueled 35 percent of total generation compared to coal’s 34.9 percent share. The EIA reports a significant increase in natural gas generation in 2015, thanks to continued low prices, but coal’s share of total generation suffered, dropping from 38.7 percent to 35. Natural gas’ share rose from 27.4 percent in 2014 to 31.6 percent in 2015.
Next year, however, the EIA predicts natural gas generation will drop slightly to 31 percent while coal is expected to average about the same — 34.8.
Nuclear power generation is expected to remain comparatively flat in 2015 and drop 2 percent in 2016.
Natural gas prices are expected to remain below $3 per million British thermal units (MMBtu) through January, supporting increased use of natural gas for power generation through 2015, and less than $3.50/MMBtu through the rest of the forecast.
The Henry Hub natural gas spot price averaged $2.66/MMBtu in September, down 11 cents/MMBtu from August. The projected Henry Hub natural gas price averages $2.81/MMBtu in 2015 and $3.05/MMBtu in 2016.
The EIA forecasts 76.2 billion cubic feet per day (Bcf/d) of natural gas consumption in 2015 and up just slightly to 76.4 Bcf/d in 2016, compared to 63.1 Bcf/d in 2014.
The STEO suggests natural gas consumption in the power sector will increase by 1.6 percent in 2015 and decrease by 2.1 percent in 2016.
Industrial sector consumption remains flat in 2015 but is expected to increase by 4.2 percent in 2016 as new projects come online and industrial consumers continue experiencing low prices.
The EIA forecasts an increase in marketed natural gas production by 5.6 percent in 2015 and 1.9 percent in 2016. Increases in the lower 48 states are expected to more than offset declines in production in the Gulf of Mexico. Increased drilling efficiency will continue supporting growing natural gas production despite low gas prices.
Domestic natural gas production is expected to reduce demand for imports from Canada and support growth in exports to Mexico. In 2015, natural gas imports dropped to the lowest monthly level since 1987, averaging 2.3 Bcf/d in May and June.
The EIA expects exports to Mexico to increase because of growing demand from the country’s electric power sector and flat natural gas production.
EIA posits LNG gross exports will increase to an average of 0.79 Bcf/d in 2016 with the startup of a major LNG liquefaction plant in the lower 48 states by the end of 2015.
Annual average coal prices for the electric power sector averaged $2.36/MMBtu in 2014. The EIA expects the delivered price to average $2.25/MMBtu in 2015 and increase by one cent in 2016.
The EIA forecasts an 8-percent decrease in coal consumption for 2015, due mainly to low natural gas prices and the retirements of coal-fired plants, leading to reduced capacity.
An increase in electricity demand and higher gas prices in 2016 are expected to result in higher utilization rates among the remaining coal-fired units, but consumption is expected to remain mostly unchanged in 2016.
A decline of 89 million short tons (MMst) in U.S. coal production in 2015 is attributed to lower domestic consumption and reduced exports. Production is expected to decrease in all coal-producing regions in 2015, the largest in the Appalachian region.
Production in the interior region (Illinois Basin) is expected to drop for the first time since 2009 and production in the western region is projected to fall below 500 MMst for the first time since 1998.
Production is expected to decrease by an additional 3 percent in 2016 though the interior region is expected to grow by 1.5 percent
Electric power sector stockpiles were 160 MMst in July, down 5 percent from June but up 35 MMst compared to July 2014.
The STEO forecasts a 2.7-percent decrease in renewables use in 2015. Conventional hydropower generation is expected to decrease by 9.7 percent – due to the California drought – and non-hydropower renewable generation is expected to increase by 4 percent.
Hydropower generation is expected to increase by 7.3 percent in 2016.
The EIA expects continued growth in utility-scale solar generation, projected to average 89 gigawatthours per day (GWh/d) in 2016. Utility-scale solar averages less than 1 percent of total U.S. power generation in 2016.
The EIA forecasts an increase to utility-scale solar capacity by more than 11 GW by the end of 2016, with 4.4 GW of new capacity being constructed in California.
Wind capacity grew by 8 percent in 2014 and is forecasted to increase by 13 percent annually in 2015 and 2016.