Coal-Fired Generation Projected to Surpass Natural Gas This Winter

Coal, the unchallenged leader in U.S. power generation for most of the past century, may regain its place at the top of the energy mix hierarchy this winter, according to projections released by the U.S. Energy Information Administration (EIA).

The EIA’s November Short-Term Energy Outlook suggests that prices for natural gas delivered to the power sector will continue rising, resulting in gas-fired generation reaching a seasonal peak of nearly $31/MWh in February 2017. That’s a far cry from the low recorded in March 2016 of about $16/MWh.

Increased gas prices would be a favorable development for the coal power sector. The national average price for power generated by coal has been between $21/MWh and $23/MWh for the past couple of years, making it the more economical choice.

As recently as 2010, coal supplied nearly twice the electricity generated from gas. However, falling gas prices as a result of the shale boom and coal plants closing due to more stringent environmental regulations have changed the landscape substantially.

In April 2015, gas generation surpassed coal generation for the first time ever. Since July 2015, gas has beaten coal every month except January 2016. But if the projections are accurate, coal will be back on top by the first of the year.

The news comes on the heels of what some consider the biggest turn of events for the coal industry: the election of Donald Trump as president. During his campaign, Trump was a big coal supporter.

“We’re going to save the coal industry,” he said.

Whether that’s true or simply a campaign promise that will fall by the wayside is yet to be seen, but it offers some hope for an industry that has been struggling.

Aaron Larson, associate editor (@AaronL_Power, @POWERmagazine)