Power Prices Fall in 2016 Due to Lower Natural Gas Values

By Editors of Power Engineering

Average wholesale electricity prices fell across the United States during 2016, mostly due to the sustained lower cost of natural gas.

The U.S. Energy Information Administration’s report indicated monthly prices ranged from $20 to $45 per MWh.

Natural gas prices averaged $2.78 per million Btus, or 17 percent lower than 2015 for the first 10 months of 2016. Milder winter weather in early 2016 kept costs low during that period.

Because of the lower cost, natural gas became the top source of U.S electricity generation on an annualized basis for the first time. An estimated 34 percent of power came from natural gas, compared to 30 percent from coal.

Natural gas first exceeded coal-fired generation in April 2015, and surpassed coal for nearly every month of 2016.

Utilities added 24 GW of capacity in 2016, over 90 percent of which were natural gas, solar and wind. Coal accounted for seven GW of capacity that was retired.

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