Even amid lower overall electricity consumption due to Covid-19 mitigation efforts, natural gas-fired power generation grew 55,000 GWh year/year through the first half of 2020, according to the Energy Information Administration (EIA).

Power Generation by Source

Comparing the first six months of 2019 to the first six months of 2020, natural gas was the fastest growing source of electric power generation, increasing 9% year/year, EIA said in a research note published Wednesday.

As total electricity generation fell 5%, coal-fired generation fell 30% during the same time frame, while nuclear generation declined 4%, according to the agency.

EIA attributed the uptick in natural gas-fired generation to a combination of low prices and natural gas-fired capacity additions.

After declining by 138,000 GWh year/year, “coal-fired generation absorbed most of the decrease in electric load in the first half of 2020,” EIA said. “…Because of historically low natural gas prices so far in 2020, coal-fired generation this year has been uneconomical in most regions compared with natural gas-fired generation, leading to price-driven coal-to-natural gas fuel switching.”

Henry Hub averaged only $1.81/MMBtu in the first half of 2020, versus $2.74 in the year-earlier period, according to EIA.

“Coal prices were relatively more stable in the first half of 2020; the average delivered cost of coal was $1.91/MMBtu this year through May compared with an average delivered cost of $2.07/MMBtu at the same time last year,” the agency said.

Regionally, coal-to-gas switching in 2020 has been most prevalent in the PJM Interconnection and Midcontinent Independent System Operator (aka MISO) regions. PJM is the grid operator for all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia, while MISO primarily serves areas in the Midwest.

“In both interconnections, competition exists between natural gas and coal as generation fuels, so relative shifts in fuel prices can influence the type of power plant that is dispatched,” EIA said.

The agency noted spot prices at Chicago Citygate and Tetco M-3 in late June that were down close to 50 cents from the year-earlier period. The lower natural gas prices corresponded with a 17,000 GWh increase in gas generation in PJM and a 15,000 GWh increase in MISO for the first half of 2020; coal generation fell 34,000 GWh in PJM and 40,000 GWh in MISO over the same time frame, according to EIA.

By contrast, natural gas-fired generation did not enjoy the same type of growth in the Electric Reliability Council of Texas in the first half of 2020. Even as coal-fired generation in the region declined 8,650 GWh, natural gas-fired generation also saw a slight decline during the period. Instead, wind and solar generation increased a combined 8,400 GWh, offsetting most of the decline in coal generation, EIA said.

About 18,000 MW of combined-cycle natural gas turbine plants have entered service since 2018, coinciding with the retirement of about 31,000 MW of capacity from coal-fired plants and about 2,400 MW of nuclear capacity, the agency said.

“Natural gas-fired generation is facing increased competition from solar and wind capacity,” according to EIA. “Since 2018, about 23,300 MW of new net solar and wind capacity has been added. Renewable energy, consisting of wind, solar and hydroelectric generation, has increased by about 5% and has been the only other fuel source other than natural gas to grow in the first half of 2020.”