Coal’s share of US generation hits rock bottom

• 12 years ago (2012-03-14)
• Junior Isles

North America 1021

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Coal’s share of US power generation has fallen to an almost 35-year low, as power generators shift to cheaper natural gas.

Nonetheless, coal still dominates US generation. Its diminishing share of monthly power generation was still the largest at 40 per cent for the last two months of 2011, according to the US Energy Department.

The last time coal's share of total generation was below 40 per cent for a monthly total was March 1978.

Total US electricity generation was 7 per cent lower in December 2011 compared to December 2010. Meanwhile, generation from natural gas rose 12 per cent to 86 TWh during the period, and coal-fired generation fell by 21 per cent to only 132 TWh.

"Natural gas combined-cycle units operate at higher efficiency than do older, coal-fired units, which increases the competitiveness of natural gas relative to coal," the Energy Department said in a statement.

US natural gas prices also slipped to a 10-year low this week, with coal in a similar lull.

Barclays Capital recently lowered its estimates and target prices for US coal producers, attributing this to trends that thermal coal fundamentals had deteriorated "significantly" more than they expected when they cautioned the industry in November.