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EIA’s Latest Data Shows Continued Shift to Natural Gas from Coal for Power Generation

The Energy Information Administration's (EIA) Electric Power Monthly report for August issued this week is pointing to coal's continued slide as the fuel of choice for power generators, while natural gas continued to take more market share.

Natural gas accounted for 138.2 million MWh generated in August, or 35.2% of total net domestic generation, compared to 135.4 million MWh generated from coal, or 34.5%.

August marked only the third month on record that natural gas surpassed coal in share of U.S. electric generation, with all three months occurring in 2015. Natural gas first overtook coal's share in April and in July, according to EIA's figures.

"I think, especially this year, that's sort of the big story in electric power generation," EIA electricity analyst Tyler Hodge said. "It's sort of signifying a general trend that we've been seeing over the last few years as the share of generation powered by coal has definitely been declining, and a lot of that has been picked up by natural gas."

Through the first eight months of 2015, coal still held the edge over gas in total MWh, but the long-term shift from coal is clear in the data.

An analysis of EIA data shows that in 2005, coal accounted for nearly half of all domestic power generation at more than 2 trillion MWh, while natural gas fueled close to 761 million MWh. Between 2005 and 2014, coal's share of total generation slipped to 1.6 trillion MWh, a decline of 21%. Meanwhile, gas generation shot up to 1.1 trillion MWh over the same timeframe, an increase of more than 47%.

That big-picture trend has continued through 2015, with coal's year-to-date share through August of U.S. electric generation down 12.6%, while gas's share climbed 18.7% from the first eight months of 2014.

Hodge said the switch from coal has been largely driven by "sustained low natural gas prices, which have been encouraging the (electric utility) industry to use more of their natural gas generating capacity."

Recent utility acquisitions have signaled an intent to further capture value from cheap and abundant U.S. shale gas. North Carolina-based Duke Energy plans to acquire Piedmont Natural Gas, its neighbor and joint venture partner in the proposed 1.5 Bcf/d Atlantic Coast Pipeline. Meanwhile, Southern Company is in the process of acquiring AGL Resources, another Atlantic Coast partner (see Shale Daily, Oct. 27).

Hodge said the U.S. Environmental Protection Agency's (EPA) Clean Power Plan is only likely to further encourage a shift away from coal moving forward.

"It's more economically driven than anything," Hodge said. "But in the future, obviously as the industry adapts to any oncoming environmental regulations, that might cause an increase in coal retirements, even the more efficient units. So it's possible we could see even more of a decline in coal generation over the long run."

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