Thursday, July 28, 2011

Coal's Share of Electricity Production Drops in Q1

The EIA reported yesterday that coal's share of electricity production in the U.S. in the first quarter of 2011 dropped to its lowest point in 30 years.  Coal power decreased by 5.7% year-over-year even though total power production increased by 1%.  Coal's share of power production was 46%, which is three percentage points lower than last year and six points lower than 2008.

The price of natural gas versus coal has a lot to do with this.  Over the past couple of summers, plants switching from coal to gas because of the extremely low price of gas kept a floor on the price of gas (albeit a very low floor).  Back in 2008, as we all remember, gas prices were in the double digit range for part of the year, so coal was much more popular.  In 2011, coal spot prices have been gradually increasing (although much coal is bought on contracts rather than the spot market), which  makes the consistently low price of gas more attractive.

Don't look for the trend to continue in the second quarter.  With significant nuclear plant outages from April to June, especially because of transmission line damage in the southeast due to tornadoes, coal likely will take up much of that slack.

1 comment:

wil said...

BAN COAL!!!!!!!