WHEELING, W.Va. — A 1,000 cubic-foot unit of natural gas sold for about $1.88 on the New York Mercantile Exchange last week, a dramatic drop from prices that were over $13 per unit in 2008.
These collapsing prices associated with Marcellus and Utica shale production – along with increased scrutiny of carbon dioxide and mercury emissions related to coal burning – are the main reasons the U.S. Energy Information Administration predicts 2016 will be the first year for natural gas to generate more electricity than coal.
Natural gas generation first surpassed coal generation on a monthly basis for the first time ever last April.
Now, the administration projects this will cover the entire year.
Amid U.S. Environmental Protection Agency regulations such as the Clean Power Plan, as well as the Mercury and Air Toxics Standards, American Electric Power and other generators are beginning to look beyond coal to produce wattage. AEP turned out the lights on 5,535 megawatts of coal-fired power in Appalachia in June, including the former 630-megawatt Kammer Plant in Marshall County.
Furthermore, AEP plans to transition its portion of the Cardinal Plant in Jefferson County to run on natural gas no later than the year 2030, while some generators in Coshocton County will also end coal usage.
“Environmental regulations affecting power plants have played a secondary role in driving coal’s declining generation share over the past decade, although plant owners in some states have made investments to shift generation toward natural gas at least partly for environmental reasons. Looking forward, environmental regulations may play a larger role in conjunction with market forces,” the EIA report states.
Until 2008, coal supplied about 50 percent of U.S. electricity generation. However, the EIA cites significant shale natural gas production since 2009 as a primary reason coal no longer holds such a commanding cost advantage.
For 2016, the EIA predicts natural gas will generate 33 percent of U.S. electricity this year, with coal accounting for 32 percent. Nuclear power will constitute 19 percent of the nation’s energy portfolio, while renewables such as solar and wind power will generate 8 percent.
Hydroelectric will make up 6 percent of power generation, while other sources will contribute a total of 1 percent, according to administration forecasts.
Moreover, the Paris-based International Energy Agency believes the combination of hydropower, wind, solar and other forms of renewable energy will generate more electricity than coal by 2030 – the year by which the Obama administration’s Clean Power Plan is supposed to meet its full goal of cutting carbon dioxide emissions from power plants by 32 percent, compared to 2005 levels.
The transition from generating with coal to natural gas puts thousands of mining and related jobs at risk. Unlike the coal industry, which requires a steady supply of employees to keep the operation running, a natural gas well can largely pump on its own once it is drilled, fracked and hooked up to a pipeline network.