Coal power still king in Ohio but natural gas making inroads

When it comes to electric generation in Ohio, coal is still king but no longer all-powerful, based on trends discussed recently by Public Utilities Commission of Ohio (PUCO) Vice Chairman Asim Haque.

In 2001 coal’s share of the Ohio generation mix was more than 87%, but by 2014 coal’s chunk of the Ohio electricity pie had been downsized to 67%, according to Energy Information Administration (EIA) data that Haque discussed during a March 26 presentation at the National Press Club in Washington, D.C.

Haque was speaking at an event sponsored by ICF International (ICF) to discuss the increasingly important relationship between electricity and natural gas.

During the same timespan natural gas has grown from a small sliver of Ohio power generation to almost 18%, according to the EIA data presented by Haque. Nuclear energy’s role in the state has been pretty stable, growing from almost 11% in 2001 to more than 12% in 2014.

Coal retirements are bound to make natural gas-fueled generation even more important as time goes on, Haque noted. More than 3,700 MW of coal-fired power capacity has already been retired in Ohio and another 3,600 MW of coal retirements are pending, Haque said.

As has been well documented, coal is also losing generation market share nationally as well. Coal accounted for 51% of the nation’s power generation in 2001 but less than 39% in 2014. Gas went from roughly 17% in 2001 to more than 27% in 2014.

But the rise of natural gas is also worrisome given its vulnerability to interruption in the PJM Interconnection during the polar vortex days of January 2014, Haque said.

PUCO has encouraged the Federal Energy Regulatory Commission (FERC) to undertake short and long term solutions for the inevitable transition from coal-fired to natural gas-fired generation, Haque said.

FERC has already launched steps to improve coordination between natural gas pipeline capacity and electricity markets – including proposing to revise the natural gas operating day and scheduling practices, Haque said.

PJM has also proposed something akin to ISO New England’s “pay for performance” design. Under such a system, is a resource fails to deliver when called upon, it will be required to pay a performance payment based on its shortfall.

Natural gas production is also growing in importance to Ohio thanks to the state’s access to Marcellus and Utica Shale formations, Haque said.

The Ohio Department of Natural Resources data shows that the state saw a nearly 94% increase in natural gas production from 2012 to 2013, Haque noted. In addition, there has been a 98% increase in core shale-related employment from 2011 to 2014.

But a big issue that currently remains unknown is whether gas-fired electric generators will purchase firm pipeline capacity, Haque said.

Haque is scheduled to speak Aug. 18 at the PennWell GenForum conference in Columbus, Ohio.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.