And the U.S. Has an Abundance of It

Here’s another bit of energy upside, and it’s something for the shale gas producers to cheer about. The EIA released its 2015 power generation fuel data and natural gas was behind coal again—but just barely. At a horse race, 2015’s coal vs. natural gas race would be deemed a photo finish. But in 2016, natural gas is probably going to overtake coal permanently as the USA’s most popular power generation fuel.


Energy Upside: Coal vs. Natural Gas for Power – Chart by EnerCom

In 2015, coal was used to generate 1,356,057 thousand Megawatt hours of electricity. NatGas came in a close second by creating 1,335,068 thousand Megawatt hours of baseload electricity. That is what allows businesses, factories, hotels, bars, restaurants, government buildings, Teslas and cell phones to function.

A milestone occurred in April 2015. That marked the first month ever that natural gas created more electricity in the U.S. than coal. It also cemented the beginning of a new reality in power generation: natural gas is the future of electricity.

eia 2015 Generation _By_Fuel SourceEnvironmental organizations like the EDF cry for renewables to power all of the U.S. economy. They view natural gas as a bridge from fossil fuels to renewable energy. But natural gas has been quietly delivering way beyond what was expected. “On an emissions rate basis (t/MWh), 2015 will be the cleanest year in over 60 years for which we have historical data,” according to an April 2015 report by Bloomberg New Energy Finance. By volume of baseload production, it’s because of the power sector’s move away from coal into natural gas-fired power plants.

According to the Bloomberg report, “U.S. efforts to cut greenhouse gas emissions look set for a huge boost [in 2015], with carbon pollution from the power sector set to fall to its lowest level since 1994. Record numbers of U.S. coal-fired power plants are set to close in 2015, and analysts at Bloomberg New Energy Finance say this will likely see power sector emissions drop 15.4% below 2005 levels.”

If you go back to the early days of the shale boom, in 2005 the U.S. power grid used 2.6 times as much coal as it did natural gas to keep the economy going. By 2015, the use of natural gas and coal to make electricity were separated by a relative frog hair—21,000 thousand Megawatt hours. That’s a little less that the total amount of electricity solar plants contributed to the grid in 2015 (solar = 26,473 thousand Megawatt hours in 2015).


Energy Upside: Gas Poised to Overtake Coal in 2016

When you look at Henry Hub natural gas in the sub-$2.00 per Mcf range, the fuel is cheap. Combine that with the plant efficiencies that today’s state-of-the-art, combined cycle natural gas plants can deliver, their relatively low cost to build, their ability to generate baseload power, and the low carbon emissions benefits of using natural gas. Unless there is some unexpected and significant natural gas supply disruption, natural gas will permanently overtake coal as the USA’s fuel of choice for electrical generation in 2016.


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