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Markets imply coal's US generation market share rebounded in January

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Markets imply coal's US generation market share rebounded in January

Driven by the "bomb cyclone" that blanketed much of the U.S. in arctic weather, the country's power prices, natural gas prices and electricity demand surged year over year in January. While margins for coal-fired generators climbed across the board, those of gas-fired generators were mixed, implying a rebound in coal's waning market share.

During the month, demand for electricity soared year over year everywhere but California.

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U.S. average day-ahead market on-peak power prices shot 66.8% higher year over year to $55.42/MWh and were highest in the Northeast, with average on-peak prices in New England averaging $114.56/MWh.

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Meanwhile, spot natural gas prices at hubs serving U.S. generators averaged $6.413/MMBtu, with prices in New York and New England averaging above $10/MMBtu.

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Spark spreads relative to those of January 2017 were mixed. In New York's wholesale power market and in the PJM, power prices failed to keep pace with natural gas prices, driving implied heat rates, or the efficiency rate at which the cost of power equals the cost of burning natural gas to generate power, 18.9% and 19.2% lower year over year.

At the same time, power prices in the Midcontinent ISO increased sharply while natural gas prices serving the region remained relatively stable, boosting margins for gas-fired generators.

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Turning to coal generation, coal-fired implied heat rates expanded significantly in markets that rely on a substantial amount of coal-fired capacity, including PJM, where they roughly doubled.

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Market prices and included industry data are current as of the time of publication and are subject to change. For more detailed market data, including power, natural gas and coal index prices, as well as forwards and futures, visit our Commodities pages.