Thursday, October 11, 2012

Natural Gas Generation Projected By EIA To Decline 10% But Coal To Rise 7% In 2013

Judged by usage of gas and coal to make electricity, 2013 is shaping up to a bad year for gas and a good one for coal. And the price of gas tells the whole tale.

Since 2008, falling gas prices fueled a 45% surge in usage of natural gas to make electricity, but that bull run is projected to screech to a halt in 2013.  Gas prices rising from the 2012 depths also mean a 10% decline in gas generation during 2013, with daily gas-fired production projected by the EIA to drop from 3.4 billion kilowatt-hours to 3.06 billion kilowatt-hours each day.

The projected 2013 retreat in gas generation means a substantial rise in coal-fired generation.  EIA projects that coal generation will increase 7%, rising from 4.187 to 4.475 billion kilowatt-hours per day.  EIA is also predicting a 6% increase in carbon dioxide emissions from coal generation and a 1.9% increase in all energy-related carbon emissions in 2013.

Approximately 65% of America's electric generation comes from either coal or gas.  How much of that 65% comes from either coal or gas is decided by intense competition between the fuels.  That's the real choice in the real world for 65% of the generation market, and the price of gas substantially makes the choice between coal or gas.

With gas prices rising, 2013 will see rising coal generation and coal recapturing some of its lost market share. 2013 will also end a run of annually increasing gas-fired electricity generation and will be the first year since 2008 that America will get less of its electricity from natural gas than in the year before.

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