[Asia Economy Reporter Yujin Cho] This year, coal-fired power generation in the United States is expected to increase for the first time in seven years since 2014. This is due to a significant rise in natural gas prices amid supply shortage concerns, leading to a substantial increase in power generation using relatively cheaper coal.
According to the U.S. Energy Information Administration (EIA) on the 18th (local time), coal-fired power generation is projected to increase by 22% compared to last year. This marks the first increase in coal-fired power generation since 2014.
Typically, power generation using natural gas has economic advantages such as higher fuel efficiency compared to coal. However, natural gas prices, which had remained stable from 2015 to 2020, have more than doubled over the past year, increasing cost burdens. This year, the average U.S. natural gas futures price rose to $4.93 per million BTU, more than twice the average price of last year.
Last year, overall U.S. electricity consumption decreased, and record-low natural gas prices led to a reduction in coal power generation.
Before 2010, the capacity factor of coal-fired power plants was over 70%, but it fell to 40% last year. This year, it is expected to rise to 51%, similar to the level in 2018.
However, the EIA forecasts that the increase in coal-fired power generation driven by rising natural gas prices will not last long. Since 2010, about 30% of coal power capacity has been retired, and no new coal power plants have been built since 2013.
Additionally, coal stockpiles at power plants are not abundant, and production has not increased enough to meet the coal demand resulting from the rise in coal power generation. Therefore, the EIA expects coal-fired power generation to decrease by about 5% next year.
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