Natural gas leads pack for US power generation
Natural gas-fired generation will remain the dominant source of power generation capacity for years to
come amid low gas prices, tougher emissions standards and an aging fleet of coal-fired plants.
Wind, solar and other renewables are capturing a greater share of the power generation capacity mix.
But the immediate outlook for capacity shows continued reliance on gas and other traditional forms of
generation, according to the American Public Power Association (APPA).
More than 168,000MW of generation capacity was added in the US between 2008-2015 — 42pc of
which was gas, 33pc was wind, 11pc was coal and 8pc was solar.
Gas was the only fuel type for which there were more capacity additions than cancellations during that
period, APPA said.
In addition, gas is expected to fuel the largest share of electricity generation in 2016 at 33pc, topping
coal which historically has been the leading fuel source, according to the US Energy Information
Administration (EIA).
A glut of gas from US shale fields have pushed prices lower, creating more demand for the fuel. Spot gas
prices at the US bench mark Henry Hub averaged at $1.67/mmBtu in March, 40pc lower than a year
earlier. The EIA projects Henry Hub prices in 2016 should average $2.25/mmBtu, down from
$2.61/mmBtu in 2015.
Gas consumption for power generation reached 26.5 Bcf/d (751mn m³/d) in 2015, a year-over-year
increase of 19pc, as electric utilities substituted low-cost gas for coal. The EIA projects power sector gas
consumption this year to reach 27.3 Bcf/d.
US marketed production which peaked last August at 79.8 Bcf/d should average 79.68 Bcf/d this year,
up by about 1pc from 2015. Production should increase by 2.1pc next year, according to the EIA.
Gas-fired generation currently accounts for 42.7pc of the 1.17mn MW US electricity generation capacity
and about 50pc of the 42,205MW generation capacity that is under construction, according to the APPA.
Operators of US coal plants are faced with growing challenges in regulatory pressure from the US
Environmental Protection Agency (EPA)’s mercury and air toxics rule and the Clean Power Plan for
reducing CO2 emissions in the power sector.
Some power plant owners had to implement costly upgrades for emissions controls on coal-fired units
but some plants were retired as the owners analyzed the upgrades would be too costly given increased
competition from gas.
In the past year wind took the top spot in new capacity addition followed by gas.
About 6,152MW of wind generation and 4,972MW of gas-fired generation was added in 2015, while
more than 18,000MW of generation capacity was retired, of which coal accounted for almost 80pc,
according to the APPA.