Coal use falls in largest US power grid

OREANDA-NEWS. Electricity generated by coal-fired power plants in the PJM Interconnection fell by 14pc in January-March from a year earlier, but coal plants set wholesale power prices more often in the largest US power grid.

Comparative fuel economics explain the lower coal burn in PJM, as mid-Atlantic natural gas prices in the first quarter were 47pc lower year over year while northern and Central Appalachian coal prices fell by 13pc and 20pc, respectively, according to the PJM internal market monitor. Total generation was 3.1pc lower than a year earlier.

Coal remains the primary generating fuel in PJM, accounting for 43pc of generation in January-March. Coal's share declined from 49pc a year earlier, when unusually cold weather in January resulted in a high number of outages for PJM's gas-fired generators.

PJM's nuclear fleet performed better in the first quarter and nuclear output was up by 1pc on the year. Nuclear plants accounted for a third of PJM's generation. The share of natural gas in generation reached 19pc from 15pc a year earlier. Output from gas-fired generation rose by 25pc in absolute terms.

The marginal profitability of coal plants improved this year despite the decline in overall generation from that fuel source. Coal plants accounted for 57pc of marginal resources while gas units set the locational marginal prices in 33pc of real-time dispatch intervals. Coal in the first quarter of 2014 accounted for only 46pc of marginal resources, with natural gas at 42pc.

The PJM market monitor expects 7.7GW of coal generating capacity to retire in 2015, with another 1.65GW planning to retire in 2016-19. Only 2GW of new coal-fired capacity is in the PJM interconnection queue.

By contrast, only 1.95GW of gas-fired capacity is retiring in the next five years while 43.4GW of new capacity is in various stages of development. Only a fraction of that proposed capacity eventually will be in service.