Cheap Natural Gas Supports Western Switch from Coal

---

Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--An abundance of natural gas and a warmer-than-usual heating season across the Northern Hemisphere is incentivizing a move away from coal in the power sector, data show.

Coal is already fading from the U.S. power sector. The federal government estimates natural gas will account for just more than 40% of the total electricity generated this year on average, compared with 24% for renewables, 19% for nuclear power and just 15% for coal.

The International Energy Agency (IEA) has attributed the ascendance of natural gas in the U.S. power sector to strong growth in production and elevated storage levels, which became bloated during a warmer-than-average winter across much of the country.

The abundance of natural gas is nonetheless a global phenomenon that helped push prices to historic lows. Henry Hub, the U.S. benchmark for the price of natural gas, averaged $1.72 per million British thermal units in February, a record low when adjusted for inflation.

Meanwhile, the average utilization of coal-fired plants declined from 48.5% over the seven-month period ending in July 2022 to 39.8% during the same period last year. For natural gas, utilization improved from 54.6% to 57.7% during the same period, the IEA estimated.

According to IEA, the U.S. economy met more than half of its electricity demand with natural gas for the first time ever on August 28, 2023.

Energy services provider Babcock & Wilcox (NYSE:BW) (Akron, Ohio) said this week it would proceed with plans to switch out coal for natural gas at boiler units running in North American power plants.

The company's thermal business unit agreed to invest $246 million for the gas conversion of two boilers, which total more than 1 gigawatt (GW) of output. A full notice to proceed is expected by the fourth quarter.

"Replacing coal or oil with cleaner-burning fuels like natural gas, biofuels or hydrogen is often a cost-effective way for plant owners to lower emissions while maintaining reliable power generation capacity," said Chris Riker, a senior vice president at the company's thermal power division.

Babcock & Wilcox has a full-scope contract that includes the design and installation of everything from new burners to fans.

The company did not respond to various requests seeking further clarification on the unit specifics.

Switching from coal to gas at various power units was accelerating even before the COVID-19 pandemic, however, particularly in the European Union.

"Natural gas is one of the mainstays of global energy," said Fatih Birol, the executive director of the IEA, in 2019. "Where it replaces more polluting fuels, it improves air quality and limits emissions of carbon dioxide."

In Europe, the Emissions Trading System (ETS) imposed penalties on power plants and factories for each ton of carbon dioxide emitted. As permits under the system increased in cost, facilities in the region began to favor natural gas as a cleaner fuel.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).