Gas overtakes coal but for how long?
The use of natural gas for power generation hit a milestone recently and is expected to continue growing, although it’s not likely to permanently supplant coal for many years.
The Energy Information Administration’s latest “Electric Power Monthly” report, which was released June 25, showed that natural gas was used to generate 31.5 percent of the country’s power in April, slightly more than coal’s 30.3 percent.
That marked the first time natural gas surpassed coal as the most-favored fuel of U.S. power generators, and, given the trends of recent years, it wasn’t unexpected.
Older coal plants are costly to operate and even more costly to retrofit to meet emissions standards, both existing and anticipated, so power generators are shutting them at a brisk clip.
Meanwhile, the widespread use of hydraulic fracturing, or fracking, to obtain natural gas from geological formations that drillers wouldn’t have touched less than 20 years ago, has made the fuel widely available and cheap. Also, since it emits less pollution than coal, power generators have been opening natural gas plants as quickly as they’ve been shutting coal ones.
The EIA, which is part of the Department of Energy, said in March that power companies intend to add 4,318 megawatts of natural gas-fired generation capacity this year. That puts natural gas second behind only wind power, of which generators plan to add 9,811 megawatts. As for coal, generators plan to retire 12,922 megawatts of capacity fueled by it.
A recent article in the MIT Technology Review said that from this year to 2020, the EIA expects the generation industry to add 53,000 megawatts of natural gas-fired capacity. The agency expects the industry to retire more than 25,000 megawatts of coal capacity from this year to 2023.
NextEra Energy Inc.’s Florida Power & Light Co. exemplifies the attitudes of some power companies toward natural gas. Earlier this month, the Juno Beach, Fla.-based company announced its intention to spend $1.2 billion to build a 1,600-megawatt natural gas fueled combined-cycle power plant in northeastern Okeechobee County, Fla. In April 2014, FPL opened a $1.3 billion, 1,250 megawatt natural gas plant in Riviera Beach, Fla., on the site of a 1960s oil plant it dismantled in 2011. The previous April, the company opened a $900 million, 1,200-megawatt natural gas plant in Cape Canaveral, Fla.
FPL is somewhat atypical in that it’s phasing out oil more than coal, namely because it didn’t have a lot of coal plants to begin with. The company has cut its annual use of foreign oil to fewer than 1 million barrels from more than 40 million barrels a year in 2001.
FPL also is moving to jettison the coal plants it has, however. In March, the company said it has asked regulators to allow it to buy the coal-fired Cedar Bay Generating Plant in Jacksonville, Fla., from which it has had a contract to purchase power since 1988, and first reduce the plant’s operations by 90 percent, then phase it out altogether.
In addition to cutting pollution, the moves allow FPL to lower its costs, said Dave McDermitt, a spokesman with the company.
“Natural gas, with the technology that we’re using, is a highly efficient fuel,” McDermitt said. “As a result of that, we continually provide customers with the lowest bills in Florida.”
Despite the growing use of natural gas and abandonment of coal by power generators, the EIA was surprised natural gas pushed coal off its perch in April.
In a “Short-Term Energy Outlook” issued May 14, the agency said it expected natural gas usage to converge with coal usage that month, not top it. Specifically, the agency thought April figures would show that generators’ natural gas usage was only 3.5 percent less than their coal usage during the month.
The EIA also said it didn’t expect “the convergence” of natural gas and coal to last. After a few months in which power generation from the two fuels rises at similar rates, the slowly-rising cost of natural gas will cause its usage to decrease, while the return to service of coal plants taken offline for maintenance will cause coal’s usage to increase, the agency said.
Overall, the EIA said in May that it expected coal and natural gas to account for 36 percent and 31 percent, respectively, of total U.S. generation this year. That’s a decrease for coal and an increase for natural gas, which, respectively, comprised 38.7 percent and 27.4 percent of fuel used by U.S. power generators last year.
On the other hand, in a “Short-Term Energy Outlook” issued July 7, the agency said it expects coal consumption by power generators to drop 7 percent this year.
Even so, the agency doesn’t expect coal to go the way of whale oil just yet.
The EIA also said in the July 7 outlook that, due to projected increases in demand for power and the price of natural gas, it expects remaining coal plants will be utilized more next year, causing coal consumption by power generators to rise 1.3 percent.
Natural gas prices are forecast to rise due to increased demand for the fuel, not only as a substitute for coal in the power industry, but as a substitute for oil in the petrochemical industry. Additionally, U.S. natural gas companies are setting up to begin exports of natural gas, in liquid form, which also will boost the price of it.
As a power-generation fuel, natural gas faces some opposition from environmentalists.
While they concede it pollutes less than coal, they think the power industry should be trying to move away from burning fossil fuels altogether. They also think the pollution from fracking, including the release of methane, a more potent greenhouse gas than carbon dioxide, may make natural gas nearly as much a threat to the environment as coal.
Interestingly, while it appears to be prevailing against coal, natural gas is getting a run for its money in one power-generation area where it’s long been a clear winner. The AES Corp. last year began marketing battery systems large enough to replace the small natural gas units used to provide power during times of peak demand. Last fall, the Arlington, Va., company won a 20-year contract to provide Southern California Edison with 100 MW of interconnected battery-based energy storage as an alternative to a peaking power plant.
So even if it supplants coal permanently as the top fuel for power generation in the U.S., natural gas would do well to heed the old Satchel Paige adage: “Don’t look back. Something might be gaining on you.”
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