Analysis: Coal loses ground in central US grid

OREANDA-NEWS. Coal generation in the Southwest Power Pool (SPP) dropped to 58pc of total power output over the winter, down from 62pc a year earlier, as natural gas, nuclear and wind power all gained market share.

Natural gas' share of total generation from December 2014 to February 2015 edged up to nearly 20pc from 19pc, with a shift to use of combined-cycle plants over simple-cycle plants, the nine-state grid agency said in a quarterly report filed with state regulators.

Overall power output in the southwest pool over the winter totaled 19,338 GWh, down by 5.8pc from 2014's much-colder winter.

Average gas prices were nearly 50pc lower compared with winter 2013-14 when freezing weather and strong gas demand strained the delivery networks.

Wintertime coal-fired generation in SPP fell by 12pc while gas generation was flat, from winter 2013-14.

Wind generation rose to 12pc of the total, up from less than 11pc the previous winter. The share of nuclear generation climbed to 9.3pc from 8.3pc.

SPP said gas-fired generators over the winter set prices nearly 40pc of the time in the real-time balancing market and about 30pc of the time in the day-ahead market. Coal was the primary marginal fuel in the remainder of intervals.

The coal-heavy region, stretching from Louisiana to Nebraska, has warned that the Environmental Protection Agency's proposed carbon rule could lead to retirement of 9GW of coal and gas generation, increasing the chance of rolling blackouts.

Wholesale prices at the SPP North hub are consistently lower than at the South hub because of abundant lower-cost generation in the north. The average north-to-south hub discount for the winter was \$5.40/MWh, compared with \$14.03/MWh during the fall, \$11.50/MWh in the spring and \$9.50/MWh in summer.