US January coal-fired generation plunges on low gas prices, mild weather: Platts Analytics

Houston — US coal-fired generation continued to decline in January as natural gas pricing dropped and weather remained mild, an S&P Global Platts Analytics report said Friday.

"US coal-fired generation has been hammered by unseasonably warm temperatures in January and falling natural gas prices," the report said.

Coal generation declined 33% year on year in January, about 45 GW, while gas-fired generation rose 10% from the year-ago month. Wind generation also hit coal consumption, growing 19%, about 6 GW.

Mild weather this January has weighed on gas prices and forwards, driving Henry Hub to hover around $2/MMBtu through June.

"Barring a dramatic reversal in weather conditions, gas prices are expected to remain at these levels through the 2020 injection season resulting in a 20 GW increase in gas-fired generation at the expense of coal," Platts Analytics wrote.

"Looking beyond 2020, rising gas prices will improve coal's competitive position, though continuing retirements will limit the upside for coal burn," the report continued. "Gas will also face pressure from rising renewables generation."

COAL STOCKPILES

Platts Analytics estimated 2019 ended with about 123 million st-124 million st of US electric power sector coal stockpiles, 21 million st higher than the previous year.

Additionally, Platts Analytics noted stockpiles likely covered 67 days of forward demand at year-end 2019, and that stocks have increased to 72 days cover as of end-January.

"Stockpile growth would have been much higher, however, if deep cuts to railcar loadings had not occurred in 4Q19," they wrote.