By - Jim Vess

Natural gas-fired generation shoulders the biggest load during summer heat

Energize Weekly, July 18, 2018

The sizzling summer that is rolling across the country is being cooled by natural gas, which is supplying the biggest share of electricity generation, according to the federal Energy Information Administration (EIA).

The EIA projects that natural gas-fired generation will supply 37 percent of the electricity from June to August, near the record set in the summer of 2016.

Heat waves have gripped much of the country. In the last 30 days, 1,351 record maximum high daily temperatures were posted around the U.S., and there were a record 3,655 lowest warm daily temperatures—an indication that things did not cool off at night, according to the National Centers for Environmental Information.

The share of electricity covered by natural gas generation is forecast to grow as power plant operators added 5.4 gigawatts (GW) of new natural gas-fired generating capacity during the first four months of the year, with an additional 15 GW scheduled to come online through the end of 2018. This would be the largest increase in natural gas capacity since 2004.

Helping to fuel the growth has been lower natural gas prices. This year EIA is forecasting the price of natural gas to be about 2 percent lower than in 2017. From 2015 to 2017, the average cost to electric utilities for natural gas was $3.16 per million British thermal units (BTUs), about 60 percent lower than the period between 2006 and 2008.

While natural gas generation continues to increase, coal-fired generation is continuing its decline. Coal prices are actually up slightly this summer, and coal’s share of electricity generation will slip to 30 percent. In 2014, coal’s share of summer generation was 39 percent. It has dropped every year since then.

More than 10 GW of coal-fired capacity was retired over the 12-month period ending April 2018.

“The continued low cost of natural gas, along with the recent additions of natural gas-fired capacity and retirements of coal power plants, drive EIA’s expectation that natural gas will contribute a growing share of electricity generation this summer, while coal’s share will fall,” the agency said.

Meanwhile, an additional 2.6 GW of utility-scale solar and wind generation came online in the first four months of 2018, with another 9.6 GW scheduled to go into operation by the end of the year. Still, renewable generation is providing less than 13 percent of the electricity this summer.

The biggest change in the generating profile is coming in the coal-dependent Midwest where the share of natural gas-fired generation is expected to rise to 20 percent from 15 percent. Coal’s share will decline to 49 percent from 53 percent last summer.

The one region where renewable generation is having the biggest impact this summer and where natural gas generation is projected to decline slightly is in the West. In the last 12 months, nearly 2 GW of utility-scale solar has come online in the region. EIA is forecasting that the share generation in the West from renewable sources, other than hydropower, will increase to 16 percent in summer 2018, up from 14 percent the previous summer.

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