Gas-fired generation hit a record on July 27, EIA says

September 3, 2020

by Paul Ciampoli
APPA News Director
September 3, 2020

Natural gas-fired generation in the lower 48 states hit an all-time high of 316 gigawatts (GW) on July 27, according to data from the Energy Information Administration (EIA).

The EIA noted that the record coincided with a record level of natural gas consumed by generating plants, so-called gas burn, set on the same day as reported by S&P Global Platts.

Platts estimates put gas burn at 47.2 billion cubic feet (Bcf). The previous record, 45.4 Bcf, was set on Aug. 6, 2019. In addition to beating the previous record, gas-burn exceeded 45.4 Bcf per day on seven days in July 2020 and one day in August.

The record level of gas-fired generation is the result of a combination of factors, namely, high demand in response to searing summer temperatures, relatively low natural gas prices, the start-up of new gas-fired capacity and increased natural gas consumption in the power sector, EIA said.

The use of natural gas for power generation has been rising for years. Earlier this month, the EIA noted that gas-fired generation in the lower 48 states increased nearly 55,000 gigawatt hours (GWh), or 9%, in the first half of 2020 compared with the first half of 2019 despite a 5% decline in total electricity generation as a result of COVID-19 mitigation efforts.

The increased use of gas-fired generation is fueled by persistently low gas prices. The EIA noted that natural gas prices at the benchmark Henry Hub in Louisiana averaged $1.73 per million British thermal units (MMBtu) for gas delivered on July 27. And, from June 1 to July 30, Henry Hub prices averaged $1.64/MMBtu, 30% lower than the prices during the same period in 2019. Adjusted for inflation, the average price is the lowest for that period since at least 1993, the EIA said, citing data from Natural Gas Intelligence.

Of the electricity generated on July 27 in the lower 48 states, natural gas held the largest share at 45%, followed by coal with a 24% share, nuclear power had a 17% share, renewable energy a 12% share, and other sources a 3% share, the EIA noted.

Low gas prices are also prompting utilities and developers to convert coal-fired plants to burn gas. A total of 121 coal plants were repurposed to burn other types of fuels between 2011 and 2019. Most of those plants, 103, were converted to burn natural gas or replaced by a gas-fired plant.

Natural gas is also the leading fuel for new fossil fuel generation. Between January 2019 and May 2020, the United States added 13.8 GW of gas-fired capacity and retired 5.4 GW for a net gain of 8.4 GW, making gas-fired generation second only to the 12.6 GW of onshore wind power built in the same period, according to EIA’s Preliminary Monthly Electric Generator Inventory.

Most of the new gas-fired capacity is in the form of combined-cycle plants that use the latest technology to achieve high efficiency ratings, the EIA said, adding that the retired gas plants were less efficient steam plants or combustion turbines.

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