The EIA’s Electricity Monthly Update shows increased use of natural gas across the U.S.
Electricity generation from coal decreased in all regions of the country in March compared to the previous year, while electricity generation from natural gas increased in all regions of the country over the same period, according to the Energy Information Administration’s (EIA) Electricity Monthly Update.
The change in consumption is largely due to price, says the EIA. For the fourth consecutive month, the monthly average price of natural gas at Henry Hub decreased from the previous month, going to $2.87/MMBtu in March 2015 from $2.91/MMBtu in February 2015. The natural gas price for New York City (Transco Zone 6 NY) saw a significant decrease in price from the previous month, going to $3.73/MMBtu in March 2015 from $15.40/MMBtu in February 2015, after warmer weather lowered demand.
On a dollar/MMBtu basis, Central Appalachian Coal remained cheaper than natural gas at $2.28/MMBtu, but on an equivalent energy content and efficiency basis, Henry Hub prices remained below Central Appalachian Coal prices for the third consecutive month.
Gas-fired combined-cycle units tend to be more efficient than coal-fired steam units, says the EIA. Since the decrease in the Henry Hub price beginning in December 2014, it has been more economical to purchase natural gas than Central Appalachian Coal on a dollar/MWh basis. The spread on natural gas prices in New York City and coal have also been closing following the end of high demand for winter heating.
The EIA’s research note admits that the competition between coal and natural gas for electricity generation is more complex than is illustrated by price alone, with delivered prices, emissions costs, supply contract terms and many other variables required for the full picture. However, the higher efficiencies and steadily declining costs of natural gas are helping to make it the preferred choice for electrical generation nationwide.
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