Dive Brief:
- Amid a glut of cheap gas, utilities in the West are turning to natural gas as a bridge fuel as they phase out coal and continue to embrace renewable energy, Argus reports.
- Several Western utilities have added increasing amounts of gas-fired power into their generation mixes, allowing them to phase out some coal and reduce startup costs when plants fire back up in the morning.
- Gas' share of generation has been slowly gaining momentum, and at times has exceeded coal generation. The U.S. Energy Information Administration said that in July the country generated more power from gas during the month, albeit just barely and only for the second time ever.
Dive Insight:
Western utilities are turning away from coal and utilizing more natural gas. A handful of utilities, including Arizona-based Salt River Project, announced their shift at the LDC Forum in Los Angeles last week that they are using gas for its increased flexibility and price.
"We need flexibility, so gas gets moved around," said Kent Price, SRP's senior marketing representative. "We burn so much more than a few years ago because natural gas prices are so cheap." The utility burned more than 350 MMcf/d in August.
Although many Western utilities are increasingly looking to renewable energy, "you need back-up," Erik Johnson, an energy trader for the City of Pasadena's utility, told the conference. "Until [electric] storage becomes truly viable, you are still going to have to have gas-fired generation that you can pull up."
Cheap gas has helped fuel choices shift from coal generation. According to federal officials, July marked the second time this year (and ever) that gas generation exceeded coal during a given month. Natural gas' share of U.S. generation in July 2015 was 35%, barely edging out coal's 34.9% to take the top spot.
"Compared to the previous July, coal-fired generation fell in every region of the country, while natural gas-fired generation rose in every region," EIA said in its analysis.
Coal-fired generation fell from 150 billion kWh to 139 billion kWh, while EIA data showed gas-fired generation rose from 114 billion kWh to 140 billion kWh. EIA said the Mid-Atlantic region had the largest decline in coal-fired generation, followed by Texas, while the Southeast and Central regions had the largest increases in natural gas-fired generation.