How does natural gas production affect my PA electricity?
According to the U.S. Energy Information Administration (EIA), Pennsylvania’s natural gas production has been increasing in recent years, largely thanks to shale plays in the Appalachian Basin. The EIA reports that Pennsylvania produced more natural gas than any state other than Texas in 2017, making up 19% of the total natural gas production in the U.S. for the same year. The rest of Pennsylvania’s energy production comes largely from nuclear power. But does it really generation half of Pennsylvania’s electricity?
How much of Pennsylvania’s electricity actually comes from natural gas?
In June 2018, nuclear generation in Pennsylvania was 7,144 thousand MW, coal-fired generation was 3,688 thousand MW, and natural gas 6,493 thousand MW. This gives a total of 17,325 thousand MW, and means that coal is generating less than a third of Pennsylvania’s energy, with nuclear and natural gas each coming in at under half. Natural gas has been catching up to nuclear energy over the years, however, and with the news of FirstEnergy’s bankruptcy and plans to shut down two nuclear plants in the near future, it seems likely that natural gas will move in and pick up the bulk of that load.
Changes to the market thanks to natural gas
The price of natural gas has been consistently falling over the years. In Jun 2008, the spot price at the Henry Hub reached a high of $12.69 mmBtu (dollars per million BTU), but by August 2018 the price had fallen to just $2.96 mmBtu. Production of natural gas in the U.S. has increased dramatically in recent years, and an increase in supply generally results in lower prices.
In comparison, the spot price of coal in Central Appalachia for the week ending September 21, 2018 was $2.97 per mmBtu, while the total operating costs for U.S. nuclear plants in 2017, according to the Nuclear Energy Institute, was $33.61 MWh. But the cost of running a coal or nuclear power plant is expensive, and it means they struggle with the abundance of cheaper natural gas.
Nuclear power plants are designed to operate for longer periods of time, up to two years, without the need for refueling. Because of their complexity, however, nuclear and coal plants also take a long time to shut down and also bring up to full power. Natural gas is not only cheap, but the most efficient natural gas plants (called “Combined Heat and Power” or CHP plants) use both boilers and turbines to produce energy. Some “combined cycle” natural gas fired plants can bring themselves to full operational capacity in just 10 minutes.
Because the deregulated electricity market in Pennsylvania is based on demand per hour, generators need to be more agile in order to respond to rising and falling demand during the course of a regular day. As a result of cheap, plentiful natural gas, coal and nuclear generators are having a hard time competing. In March 2018, FirstEnergy Corp announced that its nuclear and coal power plants had filed for bankruptcy.
In 2016, gas-fired generation outpaced coal-fired generation for the first time, and structural changes in the market have also led to the fall of coal. The 2017 Energy Ventures Analysis suggests that weaker capacity prices over the last few years have hurt coal plant economics, and that “without sufficient energy and capacity revenue to cover fixed costs associated with necessary environmental controls, many coal plants have been forced to retire.”
Keep up to date with PA Energy Ratings!
With more natural gas plants in development, as well as renewables, there will likely be changes in the price you pay for electricity. Keep up-to-date with the coming changes at PA Energy Ratings, and don’t forget that you can head over to https://www.paenergyratings.com/electricity-rates to learn more and compare plans in Pennsylvania right now.