High Natural Gas Costs Lead to Boost in U.S. Coal-Fired Power, Maintenance Tops $950 Million

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Researched by Industrial Info Resources (Sugar Land, Texas)--This year marks the first since 2014 that the U.S. has seen a year-over-year increase in coal-fired power generation, according to the U.S. Energy Information Administration's (EIA) latest Short-Term Energy Outlook.

The increase comes not just from an overall rise in electricity usage this year following a decline in 2020 with the onset of the COVID-19 pandemic, however. Electricity providers often lean more heavily toward either coal or natural gas for generation depending on the price of each commodity, and this year, natural gas prices have been much higher. According to the EIA, the year-to-date delivered cost of natural gas to U.S. power plants has averaged $4.93 per million British thermal units, more than double last year's price, resulting in increased coal-fired generation. In 2020, the utilization rate of U.S. coal-fired generation averaged 40%; this year's coal utilization rate has been about 51%, the highest since 2018.

Such statistics have been positive for coal producers. Peabody Energy (NYSE:BTU) (Saint Louis, Missouri) reported more than $900 million in coal sales for the just-passed third quarter, the highest level in seven quarters.

In order to the keep the U.S.' coal-fired power plants burning, generators are busy with maintenance activities, and these could increase in number or frequency if coal-fired power generation remains strong. Industrial Info is tracking more than $950 million in active maintenance projects at U.S. coal-fired power plants, more than $550 million of which are scheduled to kick off in the remainder of this year and 2022. The U.S. Midwest and Great Lakes market regions are neck and neck in taking the leading position in maintenance spending, with each region showing more than $220 million worth of project activity.

Click on the image at right for a breakdown by market region of active coal-fired maintenance projects in the U.S.

While known for its push for wind power in the Midwest, Berkshire Hathaway Incorporated (NYS:BRK.A) (Omaha, Nebraska) leads other U.S. companies in the value of active coal-fired maintenance projects, with approximately $68.5 million worth. In first-quarter 2022, Berkshire Hathaway subsidiary PacifiCorp (Portland, Oregon) plans to perform a major turbine overhaul and repairs to the 578-megawatt (MW) Unit 2 at the Jim Bridger Power Station in Point of Rocks, Wyoming, in the south of the state. The outage is expected to last approximately 42 days. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can click here for the project report.

Basin Electric Power Cooperative (Bismarck, North Dakota) serves nine states in the Midwest and Rocky Mountains regions. Examples of upcoming projects by the cooperative include those at North Dakota and Wyoming facilities that will take place in the first quarter of next year. Units 1 and 2 at the Leland Olds Power Station in Stanton, North Dakota, will undergo turnarounds of approximately 10 days for inspections and repairs. Subscribers can click here for the project report.

At the Laramie River Power Station in Wheatland, Wyoming, Basin will perform a maintenance outage on the 570-MW Unit 2, performing major inspections and repairs during a planned 53-day outage. Subscribers can click here for the project report.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.