In this section, we look at the resources used to produce electricity. 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 fuel type and generator type. Since the generator/fuel mix of utilities varies significantly by region, we also present generation output by region.
Net electricity generation in the United States decreased 7.6% in May 2020 compared to the previous year. This decrease in electricity generation was primarily driven by reduced demand for electricity generation caused by business shutdowns and changes to normal routines related to mitigation efforts for the 2019 novel coronavirus disease (COVID-19). At the regional-level, all parts of the country, except for the West, experienced a year-over-year decrease in electricity generation. The Western region was the loan outlier and saw electricity generation increase 3% compared to the previous May. This occurred because many states in the West experienced significantly above average temperatures this May and significantly below average temperatures last May, which caused a substantial year-over-year increase in the demand for residential cooling and in turn, an increase in electricity generation compared to May 2019.
Electricity generation from coal decreased in all parts of the country compared to the previous year. The change in electricity generation from natural gas was much more mixed, with the MidAtlantic, Central, and Western regions all seeing an increase in natural gas generation, while the Northeast, Southeast, Florida, and Texas all saw a decrease in natural gas generation. Nuclear generation as a whole was down 4.1% compared to a year ago. Other renewables generation increased in all regions of the country, with Florida seeing the largest change (up 23.9%) compared to May 2019.
The chart above compares coal consumption in May 2019 and May 2020 by region and the second tab compares natural gas consumption by region over the same period. Changes in coal and natural gas consumption were similar to their respective changes in coal and natural gas generation.
The third tab presents the change in the relative share of fossil fuel consumption by fuel type on a percentage basis, calculated using equivalent energy content (Btu). This highlights changes in the relative market shares of coal, natural gas, and petroleum. All regions of the country saw their shares of natural gas increase mainly at the expense of coal.
The fourth tab presents the change in coal and natural gas consumption on an energy content basis by region. The changes in total coal and natural gas consumption were similar to the changes seen in total coal and natural gas net generation in each region.
To gain some insight into the changing pattern of consumption of fossil fuels over the past year, 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 average price of natural gas at Henry Hub was $1.78/MMBtu in May 2020 and showed no change from the previous month. The natural gas price for New York City (Transco Zone 6 NY) saw a month-over-month decrease, going from $1.57/MMBtu in April 2020 to $1.40/MMBtu in May 2020. The average price of Central Appalachian coal decreased slightly from the previous month, going from $2.37/MMBtu in April 2020 to $2.35/MMBtu in May 2020.
After observing month-over-month price decreases throughout this year, the New York Harbor residual oil price final saw an increase in price from the previous month, going from $5.35/MMBtu in April 2020 to $6.32/MMBtu in May 2020. As is the case most months, oil was largely priced out of most electricity markets for baseload operations. However, the drastic decrease in the price of oil has made operations at peaking power plants more economical.
A fuel price comparison based on equivalent energy content ($/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. The price of natural gas at Henry Hub ($14.28/MWh) was below the price of Central Appalachian coal ($25.42/MWh) on a $/MWh basis, with the spread between the two decreasing slightly compared to last month, mainly due to the slight decrease in the price of Central Appalachian coal. The price of natural gas at New York City ($11.18/MWh) was below the price of Central Appalachian coal ($25.42/MWh) during May 2020, with the spread between the two prices increasing slightly, mainly due to the decrease in the New York City natural gas price compared to the previous month.
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.