Natural Gas Squeezing Coal off U.S. Grid

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Natural gas on the U.S. grid has increased steadily across all hours of the day since 2021 as coal fades from the electricity sector, the government said.

"Off-peak natural gas-fired generation rose about 22% between 2021 and 2023, according to our data, displacing coal-fired units as an overnight source of electricity," the U.S. Energy Information Administration (EIA) stated.

The agency is the statistician for the Department of Energy. The EIA added that lower natural gas prices were behind some of the increase, where gains were seen for all hours of the day since 2021. Market prices for natural gas have been on a steady decline for much of the year, thanks in part to a warm winter.

The EIA said this year's winter heating season, which runs from November to March, ended with 39% more gas in storage when compared with the five-year average. A separate report from consultant group Rystad Energy finds that U.S. gas storage levels during the week ending April 12 were 22% higher than during the same time last year.

To October, the agency expects less gas to go into storage because of general production declines, however.

Of the seven primary inland shale basins in the country, gas production is forecast to decline in all but two of them by May. From April to October, the EIA added that it expects total natural gas production to average 103 billion cubic feet per day (Bcf/d) this year, down slightly from the 104 Bcf/d on average during the same period last year.

"Despite lower production, we still expect the United States will have the most natural gas in storage on record when the winter withdrawal season begins in November," the agency's short-term market report for April read.

For coal, meanwhile, the agency expects a general downturn, a retraction compounded by the collapse of the Francis Scott Key bridge, which closed off parts of the Port of Baltimore, a busy hub for coal exports.

For non-fossil fuels, the EIA expects renewable energy to account for about 24% of what's on the grid this year, with most of that coming from solar power. Nuclear power comes in slightly higher than coal, meanwhile, with a 19% market share.

In a separate report, the EIA found that energy-related emissions of carbon dioxide (CO2) declined by 3% last year, relative to 2022 levels.

"Over 80% of the emissions reductions occurred in the electric power sector, caused largely by decreased coal-fired electricity generation, which was displaced by increased generation from solar and natural gas," the EIA said.

The EIA, however, is expecting no change in CO2 emissions from 2023 levels and only a modest decline by 2025.

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