Sign Up for FREE Daily Energy News
Canadian Flag CDN NEWS  |  US Flag US NEWS  | TIMELY. FOCUSED. RELEVANT. FREE
  • Stay Connected
  • linkedin
  • twitter
  • facebook
  • youtube2
BREAKING NEWS:

Vista Projects
Copper Tip Energy Services
Copper Tip Energy
Vista Projects


COLUMN-U.S. power producers’ coal consumption falls to 35-year low: Kemp


These translations are done via Google Translate

(John Kemp is a Reuters market analyst. The views expressed are his own)

* Chartbook: tmsnrt.rs/2ObCbGz

By John Kemp

LONDON, Sept 26 (Reuters) – Despite political support from the White House, U.S. coal consumption continues to fall, as power producers shutter coal-fired units in favour of cheaper and more flexible natural gas as well as solar and wind.

Electric power producers’ coal consumption fell to 298 million short tons in the first half of 2018, down from 312 million in the same period in 2017, marginally below 2016, and the lowest since 1983 (tmsnrt.rs/2ObCbGz).

U.S. power producers generated almost 6 percent less electricity from coal in the first half of the year even as total generation rose almost 5 percent and gas-fired generation was up 17 percent.

Coal-fired generation declined by 32 billion kilowatt hours in the first six months, while gas-fired generation rose by 89 billion, nuclear was up by 16 billion, solar rose 7 billion and wind was up by 15 billion.

Generators continued to close coal units, with coal-fired generating capacity down to 246 gigawatts at the end of June 2018, compared with 262 gigawatts in June 2017 and 273 gigawatts in June 2016.

Remaining coal units are being run for fewer hours and/or at lower rates than last year, another indication they are struggling to compete with cheap natural gas.

Capacity utilisation at the remaining coal-fired units was at or below prior-year levels in six of the first seven months in 2018 (“Electric Power Monthly”, Energy Information Administration, September 2018).

Another 9 gigawatts of coal-fired generation capacity are scheduled to close before the end of 2020, so coal consumption is unlikely to rise and will probably continue to decline in the next few years.

UNCOMPETITIVE COAL

Most coal-fired power plants still in operation were commissioned in the 1970s and 1980s, when surging oil prices caused a shift from oil-fired to coal-fired generation.

Most are now 35-50 years old and as a result of corrosion and fatigue require expensive replacements of steam generators and other large pieces of equipment.

Ageing power plants also suffer from rising operation and maintenance costs, increased outages, reduced reliability and reduced thermal efficiency.

Retrofitting them to comply with tougher pollution controls adds to the financial burden of keeping them in service though in many cases is not the major reason why they struggle to compete.

By contrast, gas-fired units are faster and cheaper to build, cause less pollution, and can start up and ramp down quickly, so they are more flexible and better suited to following daily changes in power consumption.

Technology and economics rather than government regulations are driving the shift away from coal and towards gas-fired generation.

COAL SUCCUMBS TO GAS

Coal-fired power plants have been losing market share for 30 years, with their share of total generation falling from a peak of 57 percent in 1988 to just 30 percent in 2017.

The principal competitor has been gas, which has seen its share of generation rise from 10 percent in 1988 to 32 percent in 2017 (“Monthly Energy Review”, EIA, September 2018).

Until 2007, overall growth in electricity consumption enabled coal-fired and gas-fired generation to increase in absolute terms, even as coal went into relative decline.

Since then, however, power demand has flattened, while gas-fired generation has continued to grow, ensuring that coal-fired electricity generation has been steadily declining in absolute as well as relative terms.

The shale revolution has entrenched the shift from coal to gas by making gas supplies plentiful and keeping prices low and relatively stable.

Coal’s major advantage over gas was, traditionally, its lower price and volatility, but the fall in gas prices and increasing efficiency of gas-fired power plants has removed even this benefit.

Low gas prices now hit the number of hours that coal-fired units run and ultimately the number of coal units that remain in service as they become increasingly old.

As the remaining capacity of coal-fired power plants falls, coal consumption will continue to trend lower in the medium term.

Unless the federal government steps in to ensure coal-fired power plants run, even when they are more expensive than natural gas, the downtrend in coal consumption will continue.

(Editing by Dale Hudson)



Share This:



More News Articles


GET ENERGYNOW’S DAILY EMAIL FOR FREE