Natural gas-fired electricity generation grows 9 percent in first half of 2020

Natural gas-fired electricity generation increased 9 percent in the first half of 2020 compared to the previous year, reported the U.S. Energy Information Administration’s (EIA) Hourly Electric Grid Monitor.

It was the fastest-growing source of electric power generation in the lower 48 states. The increase was the result of recent low prices and natural gas-fired power capacity additions despite a five percent decline in total electricity generation due to reduced business activity related to COVID-19 mitigation efforts.

Coal-fired generation took a major hit in the first half of the year, with electric generation down 30 percent year-over-year. Due to the low natural gas prices, coal-fired generation has not been economical in most regions compared with natural gas. Natural gas prices averaged $1.81 per million British thermal units (MMBtu) through the first half of the year, down from an average of $2.74/MMBtu in the first half of 2019.

Coal-to-natural gas switching occurred most frequently in the PJM Interconnection (PJM), which covers an area stretching from New Jersey to Illinois, and the Midcontinent Independent System Operator (MISO), which primarily includes areas in the Midwest. PJM and MISO account for about 35 percent of the total electric power generation in the lower 48.

EIA notes that natural gas-fired generation is facing increased competition from solar and wind capacity. Roughly 23,200 MW of new net solar and wind capacity has been added since 2018. Renewable energy, consisting of wind, solar, and hydroelectric generation, has increased by about five percent, making it the only other fuel source besides natural gas to grow in 2020.