Electricity
Electricity Monthly Update
With Data for February 2012 | Release Date: Apr. 30, 2012 | Next Release Date: May 25, 2012
Previous Issues of Electricity Monthly Update
Resource Use: February 2012
Supply and Fuel Consumption
In this section, we look at what resources are used to produce electricity. Electricity supplied from the grid is consumed the moment it is produced. Generating units are chosen to run primarily on their operating costs, of which fuel costs account for the lion's share. Therefore, we present below electricity generation output by generator type and fuel type. Since the generator/fuel mix of utilities varies significantly by region, we also present generation output by region.
Generation Output by Region
Generation output declined in almost all regions in February due to unseasonably warm temperatures. Following the same pattern as January, fossil steam generation declined in all regions, while output from combined cycle units increased across the board. Nuclear output was mixed, down mostly due to outages in Texas and the Central and West regions. Hydroelectric output increased in all regions except the West, where this year's somewhat below normal output is compared with last year's significantly above normal output.
Natural gas generation's portion of total generation grew relative to coal-fired generation (see third tab below). This trend is likely to persist in the short term as low natural gas prices make natural gas-fired generation more economical. Wind generation in the West increased significantly from February 2011 as two large wind farms in Colorado came online in early 2011.
Fossil Fuel Consumption by Region
In tandem with the decrease in coal-fired generation, the chart above shows that coal consumption decreased in all regions except for the West, where there was a slight increase in coal consumption (and also coal generation). One of the largest drops in coal consumption was observed in the Southeast, where coal consumption decreased 29% compared to February 2011.
The second tab compares natural gas consumption in February 2011 and February 2012 by region. Consistent with the increase in natural gas-fired generation, natural gas consumption increased in all regions. The most pronounced increase was in the Mid-Atlantic region where natural gas consumption increased by 66%.
The third tab presents the change in the relative share of fossil fuel consumption on a percentage basis calculated using equivalent energy content (Btu). This highlights changes in relative consumption of coal, natural gas, and petroleum. In all regions, natural gas is replacing coal as the fuel used in electricity generation. This trend is most notable in the Southeast, Texas, Mid-Atlantic, and the Northeast regions.
The fourth tab presents the change in the relative share of fossil fuel (coal and natural gas) consumption on an energy content basis from February 2011 and February 2012 by region. This highlights changes in total fossil fuel use. The shift from coal to natural gas consumption is again most notable in the Southeast, Central, and Mid-Atlantic regions.
Fossil Fuel Prices
To gain some insight into the changing pattern of consumption of fossil fuels between February 2011 and February 2012, we look at relative monthly average fuel prices. A common way to compare fuel prices is on an equivalent $/MMBtu basis as shown in the chart above. The monthly average spot price for natural gas at Henry Hub has been below the monthly average spot price for Central Appalachian coal since December 2011. Over the first two months of 2012, the gap between these two fuel prices has only gotten larger, with Henry Hub reaching a low of $2.60 per MMBtu and Central Appalachian decreasing slightly to $3.06 per MMBtu.
The average price of residual oil continued its upward trend, increasing 16% between February 2011 and February 2012. Oil is almost always priced out of the market in the continental United States and is most often used when demand for electricity is high during abnormally hot days in the summer months.
A fuel price comparison based on equivalent energy content ($/MMBtu) does not reflect differences in energy conversion efficiency (heat rate) among different types of generators. Gas-fired combined cycle units tend to be more efficient than coal-fired steam units. The second tab shows coal and natural gas prices on an equivalent energy content and efficiency basis. This comparison shows that the average February 2012 price in $/MWh for Central Appalachian exceeded the price of natural gas at Henry Hub for the seventh straight month. However, the average price of Transco Zone 6 New York did exceed the price of Henry Hub in February 2012.
The conversion shown in this chart is done for illustrative purposes only. The competition between coal and natural gas to produce electricity is more complex. It involves delivered prices and emission costs, the terms of fuel supply contracts and the workings of fuel markets.