The US Energy Information Administration (EIA) is projecting that there will be 22% more coal-fired electricity generation in the US in 2021 than in 2020 due to higher natural gas prices – but the coal spike won’t last.
Coal and natural gas have historically been the two largest sources of electricity generation in the US, and which one is used often comes down to cost.
US natural gas prices have been more volatile than coal prices, so the cost of natural gas often determines the relative share of generation provided by the two fossil fuels.
This year, natural gas prices have been much higher than previous years. The EIA reports:
The year-to-date delivered cost of natural gas to US power plants has averaged $4.93 per million British thermal units (Btu), more than double last year’s price.
The overall decline in US electricity demand in 2020 and record-low natural gas prices due to the pandemic led coal plants to significantly reduce the percentage of time that they generated power.
In 2020, the utilization rate (known as the capacity factor) of US coal-fired generators averaged 40%. Before 2010, coal capacity factors regularly averaged 70% or more. In 2021, higher natural gas prices have increased the average coal capacity factor to about 51%, which is almost the 2018 average.
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The good news about coal
But here’s the good news about coal-powered electricity’s rise: It’s temporary. The EIA writes:
Although rising natural gas prices have resulted in more US coal-fired generation than last year, this increase in coal generation will most likely not continue. The electric power sector has retired about 30% of its generating capacity at coal plants since 2010, and no new coal-fired capacity has come online in the United States since 2013. In addition, coal stocks at US power plants are relatively low, and production at operating coal mines has not been increasing as rapidly as the recent increase in coal demand.
The EIA forecasts that US coal-fired generation will decline approximately 5% in response to continuing retirement of coal and slightly lower natural gas prices.
Oh, and to state the obvious, clean energy is rapidly on the rise. In fact, it’s going to be the leading source of all US electricity by 2030. So the sooner we boot the fossil fuels, the better.
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