Share of natural gas electricity generation to rise to 37%

Natural gas-fired power plants are expected to supply 37% of U.S. electricity generation this summer (June through August), nearly as much as the record-high natural gas share of electricity generation in summer 2016, according to the U.S. Energy Information Administration. Also this summer, the share of coal-fired electricity generation is expected to fall to 30%.

Over the past decade, the natural gas share of electricity generation has risen, while the share of coal-fired electricity generation has declined as a result of low natural gas prices, increases in natural gas-fired capacity and retirements of coal-fired plants. Between 2015 and 2017, the average cost for natural gas delivered to electricity generators was $3.16 per million Btu, compared to $7.69 million Btu, between 2006 and 2008.

Low natural gas prices, environmental regulations and renewable energy policies have led to the construction of natural gas-fired and renewable power plants and the retirement of coal-fired capacity. In the first four months of 2018, 5.4 gigawatts of natural gas-fired generating capacity was added, and an additional 15 gigawatts of capacity is slated to come online by the end of the year, resulting in the largest capacity increase since 2004. Between January and April, 2.6 gigawatts of utility-scale solar and wind generating capacity has come online, and an additional 9.6 gigawatts is expected to begin operating by the end of 2018. Between April 2017 and April 2018, more than 10 gigawatts of coal-fired capacity was retired.

This summer, the price of natural gas delivered to electricity generators is expected to fall 2% to $3.16 million Btu, from the same period in 2017, according to the EIA. Over the same period, the cost of coal delivered to electricity generators is expected to rise slightly.

This summer, natural gas is expected to supply 20% of electricity in the Midwest, up from 15% in summer 2017. Coal-fired plants are expected to provide 49% of electricity in the Midwest this summer, down from 53% last summer. In the West, natural gas generation is expected to decline as renewable energy generating capacity rises. The region added almost 2 gigawatts of utility-scale solar generating capacity, between April 2017 and April 2018. This summer, the share of renewable electricity generation, excluding hydropower, will rise to 16%, from 14% last summer.