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Natural gas to provide largest share of US power through 2018

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Essential Energy Insights - January 2021


Natural gas to provide largest share of US power through 2018

The U.S. Energy Information Administration trimmed its power-sector coal demand outlook through 2018, as it now expects natural gas to provide the largest share of the nation's electricity on an annual basis through the end of that year.

Although coal does not retain the top spot from a market-share perspective in the latest "Short-Term Energy Outlook" released Oct. 11, the projection still represents an improvement for the sector relative to 2016. Natural gas-fired generation is projected to fall 8.7% year over year in 2017, while coal-fired generation is projected to climb 0.6% over the same period due to delivered natural gas prices that should average 20.6% higher at $3.47/MMBtu.

According to the outlook, U.S. generation will average 11.0 million MWh/d in 2017 before climbing 2.3% in 2018 to 11.2 million MWh/d.

The EIA expects that in 2017, coal will provide 31.0% of the nation's power, down from last month's forecast of 31.3%, to natural gas' share of 31.3%, up from last month's forecast of 30.9%. In 2018, the EIA projects natural gas will provide 32.3% of the nation's power to coal's share of 31.0%. Last month's outlook had coal's 31.8% share just ahead of natural gas' 31.4% share.

Through 2018, the EIA projects power-sector coal consumption will remain below 700 million tons annually, with the agency trimming its power-sector coal demand outlook for 2017 by 0.4% versus the prior outlook to 681 million tons, while it cut its 2018 outlook by 2.3% to 692 million tons.

The EIA also trimmed its 2017 domestic coal production outlook by 0.5% versus the prior outlook to 785 million tons for 7.8% year-over-year growth and cut its 2018 outlook by 2.5% to 788 million tons.

At the same time, the EIA cut its year-end stockpile projections. Power-sector coal stockpiles ended 2016 elevated at 169.6 million tons. The EIA lowered its 2017 and 2018 year-end stockpile projections by 3.0% and 2.5%, respectively, to 152.4 million tons and 151.4 million tons.

The agency expects U.S. coal exports, which climbed 62% year over year during the first seven months of 2017, to slow during the second half of this year and continue lower through 2018. For 2017, the EIA raised its export outlook by 2.3% to 74.8 million tons but lowered its 2018 outlook by 3.7% to 64.4 million tons. While the 2017 figure of 74.8 million tons represents 24.2% year-over-year growth, the 2018 figure of 64.4 million tons represents a 14.0% decline.