Natural gas prices will impact power generators this year, but coal rebound likely short-lived
According to projections from the US Energy Information Administration, coal will overtake natural gas as the fuel most used by power generators in 2017 due to higher natural gas prices.
The coal recovery is expected to be short-lived, however. According to the EIA’s July Short-Term Energy Outlook (STEO), by 2018 producers are expected to boost natural gas production and utilities are set to retire more coal plants based on environmental and economic reasons.
In 2016 as gas prices dropped to their lowest since 1999 and coal was replaced as the dominant fuel for US power plants.
According to EIA forecasts, gas prices will rise to $3.10 per million British thermal units (Btu) in 2017 and $3.40 in 2018, up from a 17-year low of $2.51 in 2016.
The EIA projects coal’s share of generation to rise to 31.3 per cent in 2017 and will slip to 31.2 per cent in 2018. The agency predicts gas’ share of generation to drop to 31.1 per cent in 2017 from 33.8 per cent in 2016 and will rise to 31.4 per cent in 2018.
Even with the projected increase in the use of coal in 2017, the EIA forecasts that in 2017 total energy-related carbon dioxide emissions will fall to 5,141 million tonnes, the lowest since 1992.
In 2018, the EIA expects CO2 emissions will increase to 5,230 million tonnes due to an increase in emissions from the transport sector.
Energy-related CO2 emissions peaked in 2007 at 6,000 million tonnes.
The EIA is also predicting a drop in US gas consumption from 75.11 bcf/d in 2016 to 72.86 bcf/d. If the forecast is correct, it would be the first decline in use since 2009.
In 2018, the agency sees both production and consumption will rebound in 2018 and hit record highs of 76.42 bcf/d and usage reaching 75.58 bcf/d.
