Electricity
Electricity Monthly Update
With Data for January 2016 | Release Date: Mar. 24, 2016 | Next Release Date: Apr. 25, 2016
Previous Issues
Resource Use: January 2016
Supply and fuel consumption
In this section, we look at the resources used to produce electricity. 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 fuel type and generator type. Since the generator/fuel mix of utilities varies significantly by region, we also present generation output by region.
Generation output by region
Net generation in the United States decreased 3% in January 2016 compared to the previous year. At the region-level, all regions of the country saw decreases in electricity generation compared to the previous January. The largest percent decrease from the previous January occurred in Texas (-6.8%), where temperatures returned to near average in January 2016 after the state experienced below average temperatures in January 2015. The only areas that experienced a minimal decrease in electricity generation were the Southeast region (-0.4%) and Florida (-0.3%), where each experienced temperatures that were similar to January 2015.
In January 2016, electricity generation from coal continued to show a year-over-year decrease in all regions. Natural gas generation increased in all regions of the country, except for in Texas, where electricity generation decreased due to the previously mentioned decline in residential heating due to weather conditions. Nuclear generation was down 2.3% compared to January 2015, with the largest percent decrease occurring in the Southeast region (-6.1%), where unit one at the Sequoyah nuclear plant was offline for maintenance in January 2016, whereas in the previous January, the plant operated at full capacity.
Fossil fuel consumption by region
The chart above compares coal consumption in January 2015 and January 2016 by region and shows that, like electricity generation from coal, coal consumption decreased in all regions of the country.
The second tab compares natural gas consumption by region and shows that increases in natural gas consumption from the previous January mirrored the increases in electricity generation from natural gas over the same period, including Texas, where natural gas consumption decreased compared to the prior January.
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. In January 2016, the share of natural gas consumption increased in all regions of the country at the expense of coal consumption compared to the previous year. In the Northeast, natural gas also increased its share at the expense of other fossil fuels, which saw a larger than usual share of fuel consumption during the previous January.
The fourth tab presents the change in coal and natural gas consumption on an energy content basis by region. The changes in total coal and natural gas consumption were similar to the changes seen in total coal and natural gas net generation in each region.
Fossil fuel prices
To gain some insight into the changing pattern of consumption of fossil fuels over the past year, 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. The average price of natural gas at Henry Hub had its first month-over-month increase since July 2015, going from $1.95/MMBtu in December 2015 to $2.35/MMBtu in January 2016. The natural gas price for New York City (Transco Zone 6 NY) saw a significant increase from the previous month, going from $1.69/MMBtu in December 2015 to $3.76/MMBtu in January 2016. This increase in New York City's natural gas price is often observed during this time of year when there is an increased demand for natural gas used for heating in an area of the country where the natural gas pipeline infrastructure is subject to significant congestion.
For the third consecutive month, the New York Harbor residual oil price decreased from the previous month, going from $5.91/MMBtu in December 2015 to $5.14/MMBtu in January 2016. Regardless, oil used as a fuel for electricity generation is almost always priced out of the market.
A fuel price comparison based on equivalent energy content ($/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. For the thirteenth consecutive month, the price of natural gas at Henry Hub was below the price of Central Appalachian coal on a $/MWh basis. However, the spread between the two prices decreased significantly, mainly due to the large increase in the price of natural gas at Henry Hub. The price of natural gas at New York City on a $/MWh basis was above the price of Central Appalachian coal for the first time since March 2015, due to the large increase in the price of natural gas at New York City.
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.