Gas price increased 31% in first quarter driving up coal demand

 

By Kent Knutson, Wayne Barber, GenerationHub news analysts

The price of natural gas used for power generation increased by more than 31% during the first quarter of 2013 while the delivered price of coal actually decreased by over 2% during the same period in 2012.

The result was a decline in electric output by gas of over 8% and an increase by coal of nearly 13%. That’s according to a GenerationHub Fossil Fuel Tracker analysis of U.S. Energy Information Administration (EIA) data.

In the first quarter, the delivered price of natural gas was $4.36/mmBtu while the delivered price for coal, which includes transportation fees, was $2.35.  During the first three months of 2012, by comparison, the delivered price of natural gas was $3.32 while the delivered price of coal was $2.41.

The GenerationHub analysis also indicates that the price swings have been more dramatic for independent power producer plants compared to traditional electric utility plants.

Non-utility merchant plants have seen natural gas prices increase more than 45% in 1Q13 compared the same period in 2012. Electric utility plants saw their year-over-year price of natural gas increase 18.6% in 1Q13 compared to the same period a year earlier. The price of coal for deliveries to regulated electric utilities decreased 1.7% during the same time period.

The U.S. electric utility fuel mix for the first three months of 2013 was 39.7% coal; 25.8% natural gas; 19.9% nuclear power; 7.7% non-hydro renewables; and 6.6% hydro. Power generation from oil only accounted for three-tenths of 1% of the nation’s generating mix during the first quarter.

Given the cost differential between coal and natural gas during the first quarter of this year it’s not surprising that coal generation is up 12.9% over the same period in 2012. Power driven by natural gas was down 8% in the first quarter.  Overall, electric generation at US plants topped out at 983,615 million MWh in 1Q13 – up 2.4% from the same period last year.  Coal burn at electric generating plants topped 212.8 million tons, up 11.3% from 191.1 million during the same period in 2012.  

 

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