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 increased 1.9% in December 2020 compared to the previous year. This increase in electricity generation occurred, in part, because the country, as a whole, experienced a colder winter in December 2020 relative to December 2019. HDDs were up by 5.2% in December relative to December 2019. This led to an increase in the demand for residential heating and thus, a subsequent increase in the demand for electricity. At the regional-level, the MidAtlantic, Southeast, Central, and Florida all saw a year-over-year increase in electricity generation, while the Northeast, West, and Texas all saw a decrease in electricity generation from the previous year.
Electricity generation from coal increased from the previous December in all parts of the country, except the West, while electricity generation from natural gas decreased in all parts of the country, except for in the Southeast. The national increase in coal generation (8.4%) versus the decrease in natural gas generation (-4.7%) was mainly driven by increases in the price of natural gas in the face of steady prices for coal. The Southeast saw a year-over-year increase in electricity generation from natural gas (up 5.3%) and total electricity generation (up 4%) mainly due to the cooler temperatures experienced this December compared to the previous year. This led to an increase in the need for residential heating in this part of the country where electricity is used as one of the main sources of residential heating.
Nuclear generation, as a whole, was down by 4.4% compared to a year ago, as many nuclear plants were still undergoing scheduled maintenance during December 2020. All regions of the country, except for the Northeast and MidAtlantic, saw an increase in other renewables generation compared to the previous December.
The chart above compares coal consumption in December 2019 and December 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, except for the West, saw their share of coal increase at the expense of natural gas.
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 remained relatively unchanged from the previous month, only dropping by $0.01/MMBtu from $2.64/MMBtu in November 2020 to $2.63/MMBtu in December 2020. However, the natural gas price for New York City (Transco Zone 6 NY) saw a significant month-over-month increase, going from $1.74/MMBtu in November 2020 to $2.75/MMBtu in December 2020. The average price of Central Appalachian coal increased from the previous month, going from $2.25/MMBtu in November 2020 to $2.32/MMBtu in December 2020.
The New York Harbor residual oil price saw an increase in price from the previous month, going from $9.11/MMBtu in November 2020 to $10.23/MMBtu in December 2020. As is the case most months, oil was largely priced out of most electricity markets for baseload operations.
A fuel price comparison based on equivalent energy content ($/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 ($21.09/MWh) was below the price of Central Appalachian coal ($25.10/MWh) on a $/MWh basis, with the spread between the two increasing slightly compared to last month. The price of natural gas at New York City ($22.00/MWh) was below the price of Central Appalachian coal ($25.10/MWh) during December 2020, with the spread between the two prices decreasing significantly, mainly due to the significant increase in the price of natural gas at New York City.
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.