EXTRA – A Slight Comeback for Coal

Coal’s share of U.S. baseload generation has been plummeting, but the Energy Information Administration says it might be poised for a slight rebound.

In a July 12 energy forecast, the agency predicted electricity powered by coal will rise about 3 percent in 2013, compared with a projected 13 percent decline in 2012.

“EIA expects that the higher natural gas costs projected later in 2012 and in 2013, along with record coal stocks, will encourage generators to increase their utilization of coal-fired power plants somewhat next year,” according to the agency’s Short Term Energy Outlook.

Coal-based generation has fallen because of uncertainty about environmental regulations, the comparative low price of natural gas, and mild winter weather, which mitigated the need to crank up the heat in some parts of the country.

About 36 percent of the nation’s total power generation came from coal in the first quarter of 2012, compared with 45 percent for the same time last year. EIA also attributed some of that falloff to retirements of older plants for regulatory or business reasons.

Coal’s 2013 comeback should exceed the growth of natural gas generation, which will increase by 22 percent this year but then rise by less than 1 percent in 2013, the agency said.

The electric power sector will consume about 800 million short tons of coal in both 2012 and 2013, EIA added. The good news for users: the average delivered price will drop about 3 percent this year, compared with 2011.

The agency foresees another price break next year, with the 2013 average delivered coal price at $2.25 per million Btu, or 4 percent less than the projected 2012 price.

“EIA expects that electric power sector coal consumption will increase slightly in 2013, as projected power industry coal prices fall (4 percent) and natural gas prices increase (18 percent),” it said.

Source: ECT.coop, a publication of the NRECA