Gas-fired generation set three new daily records last month, the highest being 6.37 million MWh generated on July 21, according to new analysis from the U.S. Energy Information Administration. Above-normal temperatures, reduced coal-fired generation and new gas-fired capacity additions all contributed to the spike, EIA said.
The rise happened “despite relatively high natural gas prices,” EIA noted. The previous gas-generation peak was set in July 2020, when prices were averaging around $1.77 per million British thermal units; gas prices last month were more than four times higher.
Some gas generation filled in for coal, EIA said. “Continued retirements of coal-fired generating plants, relatively high coal prices, and lower-than-average coal stocks at power plants have limited coal consumption,” the agency said.
On an annual basis, the Institute for Energy Economics and Finance says it is likely that gas-fired power generation peaked in 2020.
“Daily records are indeed important, but do not necessarily indicate where things will stand over the course of the year,” IEEFA Energy Analyst Dennis Wamsted said in an email. Gas generation for the year will be high, “particularly given the hot summer,” but data from EIA’s Short Term Energy Outlook still projects gas generation this year will not top 2020, he said.
“Going forward, gas' strength will depend in large part on how fast the looming wave of solar, wind and battery storage capacity is built out,” Wamsted said. “We expect the current supply chain problems to ease and for a major pickup in renewables construction in the next couple years, especially in the wake of the Inflation Reduction Act. We believe this will keep gas generation in check.”