OREANDA-NEWS. New US natural gas-fired power plants accounted for the vast majority of new generation in July, slightly narrowing the gap with new wind capacity in 2015, according to the Federal Energy Regulatory Commission (FERC).

The US added 680MW of new natural gas-fired capacity in July, all the result of the start of Louisville Gas & Electric Cane Run Unit 7, according to FERC's monthly infrastructure report. The 150MW Osage wind farm in Oklahoma, owned by Enel Green Power North America, was the sole wind project to come on line, marking a slowdown for the sector. The only other new capacity in July was 35MW of solar.

Natural gas accounted for 1,866MW of new 2015 capacity through July, down from 3,372MW for the same period in 2014. While natural gas generation outpaced wind last month, wind is still the leading source of new capacity this year, with 2,119MW, a 68pc jump from the first seven months of 2014.

The drop in new natural gas and uptick in wind in 2015 may reflect changes in marginal costs favoring wind, a shift that could be cemented under new federal regulations for cutting CO2 emissions from fossil fuel-fired power plants, Moody's said. But it still may be some time before wind and solar can compete head-to-head with gas.

"The cost of solar and wind power is still a lot higher than the cost of natural gas in most cases, once all the subsidies, costs of supporting infrastructure for intermittency and the distance to reach the renewable resources are accounted for," Moody's said.

The wind sector has been aided by the federal production tax credit, which expired at the end of 2014. The industry and its allies in Congress are pushing to renew and extend the 2.3?/kWh credit through 2016. The Senate Finance Committee in July approved a bill to extend the credit and a number of other tax incentives.

Even without the credit, wind has become more competitive in some regions, especially the midcontinent, where wind power purchase agreements offer prices between $20-30/MWh, compared with $60-70/MWh for, according to a Morgan Stanley analysis of the US Environmental Protection Agency's Clean Power Plan. The cost of wind could decline further in the wake of new efficiency advances in turbine technology.

An extension of the investment credit plus new turbines could drop power purchase agreement rates to $10-$20/MWh in 2016. "Without the tax credit subsidy, this would be $30-35/MWh, still well below the cost of a new gas plant," Morgan Stanley said.