September 25, 2013 | 3
In particular, the relative price between coal and natural gas. Today, the U.S. Energy Information Administration (EIA)came out with an update that says electricity generated from natural gas dropped 14 percent in the first seven months of the year compared to the same period in 2012. Electricity from coal, on the other hand, increased by about 7 percent.
Natural gas prices have increased by 40-60 percent in the first half of this year as demand increased faster than supply (somewhat hard to believe with the amount of product being flared). But keep in mind that 2012 also saw the lowest natural gas prices in a decade. Natural gas is now returning to prices seen in 2009 to 2011.
I don’t think this signals an appreciable resurgence for coal in any long-term, sustainable way. Natural gas would have to become way more expensive for a utility to consider building a coal plant with capture tech. I think it does more to highlight the elasticity of substitution in the country’s generation mix, that is, switching from one fuel to another as one becomes more expensive than the other. But as older, less efficient coal plants are retired, there will be less substitution happening.