Gas-burn for power generation typically peaks at the end of June or the beginning of August, but power generators optimize the volume their gas use considering the spot price at Henry Hub and the price of competing fuels, notably coal.
Average natural gas prices at power plants were $1.02/MMBtu higher in the first half of 2017 compared with the first half of 2016, while coal prices were about the same in the first half of both years. Henry Hub natural gas spot price averaged $2.27/ MMBtu from April 1 through July 25, 2016, compared with $3.03/MMBtu during the same period in 2017.
Coal, not gas provides most energy in the U.S.
The year 2017 is expected to end with an average gas-burn of 25.9 Bcf/d – around 9% lower than 2016 levels, given that coal has overtaken natural gas this year as the nation’s prime fuel source.
Over 30% of all utility-scale electricity in the first four month of 2017, were based on coal, compared to 28% for natural gas, according to the US Energy Information Administration (EIA).
Coal and natural gas generated 30% and 34% of the overall electricity used in 2016, respectively – the first year that gas exceeded coal as a fuel source in the power sector.
In the EIA’s most recent Short-Term Energy Outlook the agency writes that overall electricity generation is expected to be slightly lower than the 2016 level, and natural gas’s share declines because of larger shares from renewable sources (particularly hydropower) and coal-fired generation.