Electricity
Electricity Monthly Update
With Data for November 2015 | Release Date: Jan. 26, 2015 | Next Release Date: Feb. 26, 2016
Previous Issues
Resource Use: November 2015
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 5.2% compared to the previous November. This large decrease in generation occurred because the country experienced a very warm November 2015, leading to a decreased demand for electricity generation used for residential heating. Furthermore, the country experienced a very cold November 2014, which further aided in the large decrease in electricity generation when November 2015 is compared to November 2014. At the region-level, the only region of the country that saw an increase in electricity generation compared to the previous year was Florida, where above average temperatures actually led to an increase in electricity generation as demand for residential cooling increased.
Electricity generation from coal decreased in all regions of the country compared to November 2014, while electricity generation from natural gas increased in all regions of the country over the same time period. This overall decrease in coal generation and increase in natural gas generation throughout the country has been observed over the past several months, as low natural gas prices have contributed to the increased reliance on natural gas for electricity generation.
Fossil fuel consumption by region
The chart above compares coal consumption in November 2014 and November 2015 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 November mirrored the increases in electricity generation from natural gas over the same period.
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 November 2015, the share of natural gas consumption increased in all regions of the country at the expense of coal consumption compared to the previous year.
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 decreased considerably from the previous month, going from $2.37/MMBtu in October 2015 to $2.15/MMBtu in November 2015. The natural gas price for New York City (Transco Zone 6 NY) also saw a decrease from the previous month, going from $2.21/MMBtu in October 2015 to $1.86/MMBtu in November 2015.
The New York Harbor residual oil price decreased from the previous month, going from $7.62/MMBtu in October 2015 to $7.40/MMBtu in November 2015. Regardless, oil used as a fuel for electricity generation is almost always priced out of the market.
A fuel price comparison based on equivalent energy content ($/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 eleventh consecutive month, the price of natural gas at Henry Hub was below the price of Central Appalachian coal on a $/MWh basis. The spread between the two prices widened considerably compared to the previous month, due to the large drop in the price of natural gas at Henry Hub. The spread between the New York City gas price and the price of Central Appalachian coal increased as well, albeit not as drastically, due mainly to the decrease in the natural gas price of 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.