U.S. EIA Expects Natural Gas To Be Largest Source Of Summer Electricity Generation

The U.S. Energy Information Administration Tuesday reported it expects that electricity generation fueled by natural gas this summer (June, July, and August) will be lower than last summer, but it will continue to exceed that of any other fuel, including coal-fired generation, for the third summer in a row.

The projected share of total U.S. generation for natural gas is expected to average 34 percent, which is down from 37 percent last summer but still exceeds coal’s generation share of 32 percent.

At the national level, shares of both natural gas and coal are expected to be lower than last summer, as output from hydroelectric and other renewable generators is expected to increase.

The Midwest region is the only area of the country in which coal fuels more than half of summer electricity generation (54 percent).

In other regions, no single fuel provides the majority of electricity generation during the summer. The Northeast and South regions are close to this level, with natural gas accounting for an expected 44 percent and 43 percent of total summer generation, respectively.

Natural gas first exceeded coal as the nation’s primary electricity fuel on a monthly basis in April 2015 and on an annual basis in 2016.

During the summer of 2016, at a time when natural gas prices were relatively low, 37 percent of U.S. electricity generation came from natural gas and 33 percent came from coal.

A decade before that, in summer 2006, 25 percent came from natural gas and 46 percent from coal.

The use of natural gas in the power sector is sensitive to natural gas prices. As natural gas prices have risen, the natural gas share of the electricity generation mix has fallen slightly.

Over the first three months of 2017, the Henry Hub natural gas price averaged $3.01 per million Btu (MMBtu) compared with $2.00/MMBtu during the same period of 2016.

As a result, the natural gas share of the U.S. electricity mix fell from 32 percent in the first quarter of 2016 to 29 percent in the first quarter of this year, while coal’s share of generation rose from 29 percent to 31 percent over that same period.

EIA expects that the Henry Hub price will continue to average slightly more than $3.00/MMBtu through the summer.

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