Coal poised to retain majority of U.S. power market share

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U.S. coal is poised to retain its majority share of the U.S. power market, based on data released by Bentek Energy. U.S. coal consumption in winter 2013-2014 increased 17 percent from winter 2012-2013 to 74.1 million short tons per month.

Similarly, coal-fired generation accounted for an estimated 44 percent of the total U.S. power stack, compared to 41 percent during the previous two winters.

Meanwhile, natural gas held steady at 24 percent of power generation compared to last winter and declined 2 percent compared to the winter prior. The report examines how record winter cold pushed U.S. electricity load to levels traditionally seen during the peak of summer and increased demand for all power-generating sources, particularly coal.

“Based on our analysis, coal is expected to remain a viable fuel source in the U.S. power sector, despite increased environmental regulation and competition from cheap and plentiful shale natural gas,” said Michael Bennett, a Bentek analyst and the report’s lead author. “This contrasts sharply with the past decade, during which coal’s market share dropped by 12 percent.”

A major driver of heightened winter coal consumption was natural gas prices. According to the report, prices hit $7 per million British thermal units (/MMBtu) several days this winter and averaged $4.60/MMBtu at Henry Hub, the standard delivery point for the New York Mercantile Exchange (NYMEX) natural gas futures contract in the U.S. This compares with $3.46/MMBtu during the previous winter and $2.75/MMBtu in winter 2011-2012.

As a result, coal stockpiles at U.S. power facilities fell to the lowest levels since 2006. Stockpiles peaked in mid-June 2012, but plunged to 113 million short tons in March, compared to a five-year average of 177.9 million short tons. Reserves since have rebounded to 141.5 million.

Based on historical trends, stockpiles are unlikely to stretch beyond 136 million short tons by the end of June, or about 18 million short tons less than the five-year minimum. Coal stockpiles typically peak in mid- to late-June just prior to the height of the summer cooling season, and then experience a slight decline, followed by another build in the fall.

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October 2015
Volume 19, Issue 9

Utility Products Topics

Transmission & Distribution
                       Vehicles & Accessories
Tools & Supplies   Safety
Line Construction & Maintenance   Test & Measurement

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