Electricity
Electricity Monthly Update
With Data for July 2012 | Release Date: September 24, 2012 | Next Release Date: October 26, 2012 |
Re-Release Date: September 27, 2012 (correction)
Previous Issues of Electricity Monthly Update
Resource Use: July 2012
Supply and Fuel Consumption
In this section, we look at what resources are used to produce electricity. Electricity supplied from the grid is consumed the moment it is produced. Generating units are chosen to run primarily on their operating costs, of which fuel costs account for the lion's share. Therefore, we present below electricity generation output by generator type and fuel type. Since the generator/fuel mix of utilities varies significantly by region, we also present generation output by region.
Generation Output by Region
Throughout the continental United States as a whole, net generation decreased 0.8 percent in July 2012 compared to July 2011. This followed the 0.7 percent decline in population-weighted cooling degree days observed in the continental U.S. over the same period. As observed over many of the prior months, natural gas continued to increase its share as a percentage of total generation in July 2012, cutting into the monthly electricity generation share produced at coal-fired power plants a year earlier. Thus, gas-fired, combined cycle units continue to provide more electricity generation at the expense of fossil steam generators (which are primarily coal-fired). This trend was most pronounced in the west, southeast, and central regions.
Fossil Fuel Consumption by Region
In tandem with net generation, the chart above shows that coal consumption decreased in all parts of the continental U.S. The Southeastern, Central, and Mid-Atlantic regions continue to see the most significant drop in coal consumption compared to last year.
The second tab compares natural gas consumption in July 2011 and July 2012 by region. Consistent with the increase in natural gas-fired generation, natural gas consumption increased in all regions except for Texas. This decrease in natural gas-fired generation in Texas occurred because total generation was down in 2012 as the State experienced its hottest July on record in 2011.
The third tab presents the change in the relative share of fossil fuel consumption by fuel type on a percentage basis calculated using equivalent energy content (Btu). This highlights changes in the relative market shares of coal, natural gas, and petroleum. Similar to trends in physical consumption, natural gas displaced coal as a percent of fossil fuel in all regions of the Nation.
The fourth tab presents the change in the relative share of fossil fuel (coal and natural gas) consumption on an energy content basis from July 2011 and July 2012 by region. Total fossil fuel use increased in the west region due to warmer weather and reduced hydro generation, while the rest of the country saw total fossil fuel use stay relatively the same or slightly decrease.
Fossil Fuel Prices
To gain some insight into the changing pattern of consumption of fossil fuels between July 2011 and July 2012, we look at relative monthly average fuel prices. A common way to compare fuel prices is on an equivalent $/MMBtu basis as shown in the chart above. After reaching a low of $2.03 / MMBtu in April 2012, the price of Henry Hub natural gas has increased by over 50 percent to $3.05 / MMBtu in July 2012. Over the same time period, Central Appalachian coal decreased by 6.7 percent.
After dropping for three months in a row, the average price of residual oil increased 4.5 percent from the previous month to $17.75 / MMBtu in July 2012. Regardless, it remains almost always priced out of the market in the continental United States.
A fuel price comparison based on equivalent energy content ($/MMBtu) does not reflect differences in energy conversion efficiency (heat rate) among different types of generators. Gas-fired combined cycle units tend to be more efficient than coal-fired steam units. The second tab shows coal and natural gas prices on an equivalent energy content and efficiency basis. This comparison shows that the average July 2012 price in $/MWh for Central Appalachian coal is still higher than the price of natural gas at Henry Hub for the twelfth straight month. However, because of the increase in the price of natural gas, the gap between the two closed even further in July 2012.
The conversion shown in this chart is done for illustrative purposes only. The competition between coal and natural gas to produce electricity is more complex. It involves delivered prices and emission costs, the terms of fuel supply contracts and the workings of fuel markets.