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Coal-Fired Power Generation Growth

Coal Use in Power is Up This Year

Written by Brian Hicks
Posted February 14, 2013

Genscape, an energy data provider that keeps track of power usage across the U.S., indicates that over January, coal-fired power generation went up by 8.9 percent from a year ago.

Key to this increased power demand and generation were higher-than-usual electricity demand, a rise in the price of gas, and a dip in power generated from nuclear and other renewable sources.

The cold weather caused this year to start out with demand for power up 3.2 percent compared to the same period in 2012.

Meanwhile, nuclear facility problems like those at DTE Energy Co.’s (NYSE: DTE) 1085 MW Unit 2 and First Energy Corp.’s (NYSE: FE) 1,240 MW Perry plant contributed toward bringing down the level of power generated from nuclear sources by 2 percent through January, Reuters reports.

Renewable energy, generated mainly from wind and hydro sources, dropped 1.32 percent compared to January 2012, and the shale-driven gas prices, which have continued to drop over the past 3 years, rose slightly.

Those prices will eventually rise more, and once that happens, coal will become the more attractive choice.

On the NYMEX, gas futures were up to $3.645 per million British thermal units in January, driven largely by demand for gas-fueled heating solutions.

In early February, however, coal-fueled power generation rose 11 percent over the same period in 2012, and if gas prices do not drop back below $3 per million British thermal units, gas might not continue to be the most economical solution.

The Henry Hub spot natural gas price last year was around $3.34; but in January last year, it was around $2.70 per mmBtu. This price level has hovered between $3 to $4 since late September 2012.

Reuters quotes Steven Maestranzi, director of publications at Genscape:

"We're not going to see those same levels of coal and gas burn this year if Henry Hub prices remain where they are."


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