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Electricity Monthly Update

With Data for September 2020 Release Date: November 24, 2020 Next Release Date: December 24, 2020

Resource Use: September 2020

Supply and fuel consumption

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.

Generation output by region



Net electricity generation in the United States decreased 7.3% in September 2020 compared to the previous year. This decrease in electricity generation occurred because the country experienced a much cooler September in 2020 relative to September 2019. Cooling degree days (CDDs) were down 24.5% in September 2020 compared to September 2019, which was the second hottest September on record. This led to a decrease in the need for residential customer cooling for the country during this September compared to the previous September, which decreased the need for electricity generation compared to a year ago. At the regional-level, all regions of the country, except for the Northeast, saw a decrease in electricity generation compared to September 2019. The Northeast was the outlier and saw a 3.3% increase in electricity generation compared to the previous year, mainly due to experiencing warmer regional temperatures this September compared to last year.

Electricity generation from coal decreased from the previous September in all parts of the country, except for Florida. All parts of the country, except for the Northeast and West, saw natural gas generation increase compared to the previous year. Nuclear generation, as a whole, was down slightly by 0.5% compared to a year ago. All regions, except for the West, saw an increase in hydroelectric generation compared to September 2019. The Western region saw a 3.8% decrease in hydroelectric generation, which is only notable this time of year because the West experienced severe drought conditions in September and for most of this summer.

Fossil fuel consumption by region





The chart above compares coal consumption in September 2019 and September 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. The MidAtlantic, Central, Southeast, and Western regions all saw their share of coal increase at the expense of natural gas, while Florida and Texas all saw their share of natural gas increase 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.

Fossil fuel prices



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 saw a significant month-over-month decrease, going from $2.28/MMBtu in August 2020 to $1.93/MMBtu in September 2020. The natural gas price for New York City (Transco Zone 6 NY) also saw a sizeable month-over-month decrease, going from $1.51/MMBtu in August 2020 to $1.35/MMBtu in September 2020. The average price of Central Appalachian coal increased from the previous month, going from $2.33/MMBtu in August 2020 to $2.52/MMBtu in September 2020.

After four consecutive month-over-month increases, the New York Harbor residual oil price saw a decrease in price from the previous month, going from $8.72/MMBtu in August 2020 to $8.30/MMBtu in September 2020. As is the case most months, oil was largely priced out of most electricity markets for baseload operations.

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 ($15.45/MWh) was below the price of Central Appalachian coal ($27.24/MWh) on a $/MWh basis, with the spread between the two increasing compared to last month, mainly due to the decrease in the price of natural gas at Henry Hub. The price of natural gas at New York City ($10.78/MWh) was below the price of Central Appalachian coal ($27.24/MWh) during September 2020, with the spread between the two prices increasing 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.

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