The U.S. Energy Information Administration (EIA) expects the amount of electricity generated from coal to decline by nearly 5% in 2012 as generation from natural gas increases by about 9%.
At the same time, EIA forecasts that electricity produced from coal will increase by 3.8% in 2013, as projected coal prices to the power sector fall slightly while gas prices increase, and coal regains some of its generation market share.
Those are a couple of observation included in EIA’s Short-Term Energy Outlook posted on the agency’s Web site March 6.
The EIA recently reported that coal’s share of U.S. electric generation dipped to 39% in December 2011, the lowest level in three decades. Coal remains, however, the largest single power sources for the U.S. electric grid.
Recent data show that the trend in displacing coal with natural gas as a generation fuel has accelerated in response to the current low price of natural gas, EIA said. “EIA expects this fuel displacement pattern to continue at least through the first half of 2012, causing the annual average share of total generation fueled by natural gas to rise from 24.8% in 2011 to 27.1 % for 2012,” the agency said.
Coal’s share of electric generation is predicted to be 40.4% in 2012 and 41.2% in 2013.
As delivered natural gas prices begin increasing later this year, in response to higher demand and flattening growth in production, EIA expects the trend in fuel displacement will reverse slightly in 2013, with natural gas’ share of U.S. generation falling back to an annual average of 26.1%.
The price of natural gas delivered to electric generators is estimated to have averaged about $3.30 per MMBtu in February 2012, which would be its lowest nominal value in 10 years, EIA said.
Delivered coal prices to the electric power sector have increased steadily over the last 10 years and this trend continued in 2011, with an average delivered coal price of $2.40 per MMBtu (a 5.8% increase from 2010). But the decline in demand from coal plants, and reduction of mine production in Appalachia could push delivered coal prices about 3% lower than they were in 2011, EIA predicted.
Other short-term observations on the EIA Web site include a prediction that the U.S. residential average for power prices will dip from 11.84 cents per KWH in 2012 to 11.73 cents per KWH in 2013.