In the News:
Natural gas-fired power generation higher in first half of 2020
Natural gas-fired generation in the Lower 48 states increased nearly 55,000 gigawatthours (GWh), or 9%, in the first half of 2020. Natural gas was the fastest-growing source of electric power generation, according to data from the Hourly Electric Grid Monitor. The increase in natural gas-fired generation, which is the result of recent low prices and natural gas-fired power capacity additions, comes despite a 5% decline in total electricity generation. The decrease in electricity consumption is partially attributable to reduced business activity as a result of COVID-19 mitigation efforts.
Coal-fired generation absorbed most of the decrease in electrical load in the first half of 2020, registering a 138,000 GWh (30%) decline in output. With historically low natural gas prices so far in 2020, coal-fired generation this year has been uneconomic in most regions compared to natural gas-fired generation, leading to price-driven coal-to-gas fuel switching. The monthly Henry Hub spot price averaged $1.81 per million British thermal units (MMBtu) through the first half of the year, compared to an average of $2.74/MMBtu in the first half of 2019.
Coal-to-gas switching was most prominent in the Pennsylvania, Jersey, Maryland Power Pool Interconnection (PJM), which covers an area stretching from New Jersey to Illinois, and the Midcontinent Independent System Operator (MISO), which primarily includes areas in the Midwest. PJM and MISO together make up about 35% of the total Lower 48 states’ electric power generation. 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. At the end of June, the spot prices at the Tetco M3 hub in eastern Pennsylvania and the Chicago Citygate had fallen to $1.58/MMBtu and $1.66/MMBtu, respectively, down nearly 50¢/MMBtu each from last year. As prices have fallen, natural gas-fired generation increased by about 17,000 GWh in PJM and 15,000 GWh in MISO in the first half of 2020, while coal-fired generation declined about 34,000 GWh in PJM and 40,000 GWh in MISO.
Capacity additions have also contributed to the growth in natural gas-fired generation so far in 2020. According to the Electric Power Monthly, about 18,000 megawatts (MW) of net capacity of new combined-cycle natural gas turbine plants have entered service since 2018. Output from these highly efficient plants have been steadily ramping up and helping to drive the latest increase in generation. Over the same 30-month period, about 31,000 MW of net capacity for coal-fired plants have been retired along with about 2,400 MW in net capacity for nuclear power plants.
At the same time, natural gas generation is facing increased competition from solar and wind capacity, where 26,700 MW of new net capacity has been added since 2018. As a result, renewable energy, consisting of wind, solar, and hydroelectric generation, has been the only other source of power generation besides natural gas to experience growth in the first half of 2020, with an increase of about 5%.....
*****
.....U.S. LNG exports decrease week over week. Four liquefied natural gas (LNG) vessels (two from Sabine Pass and one each from Cove Point and Cameron) with a combined LNG-carrying capacity of 15 Bcf departed the United States between July 9 and July 15, 2020, according to shipping data provided by Marine Traffic. This level is the lowest reported U.S. LNG export volume since December 8, 2016, when Sabine Pass LNG was the only U.S. LNG export facility and had two trains in operation..........MUCH MORE
Front futures 1.7270 last, up a fraction of a penny.
