The region with the largest shift between coal and natural gas in terms of both the overall generation levels and the relative fuel mix has been in the Southeast U.S., said the Energy Information Administration in the Nov. 22 version of its Today in Energy feature.
Lower natural gas prices, a concentration of highly efficient natural gas-fired generators, and the high cost of shipping coal from far-flung production regions like the Powder River Basin (PRB) have all contributed to this shift.
The Southeast includes three large, vertically integrated utility systems as well as a patchwork of smaller service territories. While these systems do not dispatch generation units through auctions like regional transmission organizations, they still generally choose which units to run based on the fuel costs associated with operating them, EIA pointed out.
Electric units that are fired by all types of coal were backed down during the spring of 2012, when natural gas prices in the region were at their lowest point in a decade at about $2/mmBtu. Coal-fired generation rebounded modestly in 2013 as natural gas prices rose above their 2012 levels, but coal is still contributing less than 50% of regional generation this year, which is a dramatic shift from the 2001-09 period, EIA pointed out.
EIA noted that coal represented a little less than 60% of regional power generation in 2001, falling to about 40% right now. The biggest growth to make up for that coal loss was in gas-fired generation.
Power plants in the Southeast, like Georgia Power’s giant Scherer plant, are as much as 1,600 miles from cheap, low-sulfur PRB coal. Plants in the region have in recent years, like Scherer since the 1990s, have used PRB coal, while others have largely relied over the longer term on low-sulfur Central Appalachia coal. Some plants with cost-effective waterborne deliveries, like Tampa Electric’s fully-scrubbed Big Bend plant in Florida, take high-sulfur Illinois Basin coal.
Although they are volatile at times, natural gas prices as delivered to electric power plants in the Southeast have been hovering at or below $4/mmBtu since 2011, EIA noted. Delivered coal prices, in contrast, have been holding steady or rising since 2003.
Natural gas-fired units have been able to take advantage of lower prices, leading to the drop in coal-fired output in the region. The Southeast is also home to a concentration of highly efficient natural gas combined-cycle plants, meaning that the region can take advantage of the lower natural gas prices to displace a large amount of coal-fired generation, EIA reported.