Coal Is Losing the Battle for the U.S. Market — Badly
10 Mar 2016
So much has changed since September. Just five months ago, coal and gas were neck and neck for their share of U.S. power generation. Now, coal generation has fallen so fast that some days even nuclear power sees more action.
Since the beginning of the year, coal-fired generation has fallen below nuclear generation three times — on Feb. 20, Feb. 28 and March 6 — as cheap natural gas prices entice power generators to switch away from coal, said Michael Lawn, gas and power market specialist at Bloomberg, citing Genscape data. Before that, coal generation had only fallen below nuclear once ever, according to EIA data going back to 2003 — for five days that began on Dec. 23, 2015.
That's not because nuclear generation is on any kind of significant rise. Nuclear, which has been holding pretty steady at around 20 percent of U.S. power generation for years, has been able to snag the No. 2 power-generation spot largely due to coal's dramatic decline.
And coal's fall from grace isn’t likely to stop now. With benchmark U.S. natural gas prices hovering at about $1.50 per million British thermal units, even inefficient gas-fired power plants are cheaper to run than efficient coal plants, Lawn said. And this summer, with forward-curve gas prices below $2 through July, coal's share of the power market will continue to cool.
Source: Bloomberg