Fuel Switching Part 1: United States
January 26, 2011
Coal to natural gas fuel switching the United States is a function of coal prices versus natural gas prices. Coal has historically been the fuel of choice, but the percentage of electricity generated from coal has dropped from 52.1 in 1996 to 44.5 in 2009 while the percentage generated from natural gas has risen to 23.3 from 13.2 over the same period.
In 2009, high coal prices relative to low natural gas prices caused an 11.5 per cent drop in the amount of electricity generated by coal compared to a 4.3 per cent increase in the amount generated by natural gas.
On an annual basis, the percentage of electricity generated from coal rises in the winter months when natural gas is directed to home heating. Conversely, in summer months, more natural gas is available for electricity generation, so the amount generated by coal decreases.
In the longer term, the United States Energy Information Administration predicts that by 2035, natural gas will account for 25 per cent of the electricity generated in the U.S. compared to the current 23 per cent. Over the same period, coal-fired electricity will drop to 43 per cent from 44.5.
These changes result from the expectation that natural gas prices will remain low for at least the next ten years and construction costs for natural gas plants will remain lower than those for new nuclear or renewable energy plants. Although there are no federal government policies to reduce greenhouse gas emissions, environmental concerns will curtail new coal-fired capacity.