In the News:
Natural gas-fired electricity generation was higher in first-half 2023 than in first-half 2022
Natural gas-fired electricity generation across the Lower 48 states increased by 9.7%, or 66.2 terawatthours (TWh), in the first half of 2023 (1H2023) compared with the first half of 2022 (1H2022), making it the single largest growing source of electricity generation, according to data from our Hourly Electric Grid Monitor. The increase in natural gas-fired generation was driven by lower natural gas prices and lower generation from other sources, in particular coal, and occurred despite a 2.9% (57.5 TWh) decline in total electricity generation, largely attributable to mild weather.
Natural gas-fired electricity generation peaks in the summer when electricity demand for air conditioning is highest due to seasonally high average temperatures. Another lower peak occurs during the winter, when use of heat pumps, electric radiators, space heaters, and other electric heating equipment to heat buildings increases in some parts of the United States. Over the first six months of this year, the cumulative number of population-weighted heating degree daysacross the Lower 48 states was 10.2% lower than the 10-year (2013–2022) average and 11.6% lower than 1H2022, while the cumulative number of cooling degree days was 23.1% lower than the 10-year average and 33.7% lower than 1H2022. This mild weather contributed to a decline in overall electricity generation compared with 1H2022.
Coal-fired electricity generation decreased the most out of all the fuel sources in 1H2023, declining 25.8% (107.2 TWh) compared with 1H2022. In the electric power sector, combined-cycle natural gas-fired generation units typically compete with coal-fired generation units to provide the lowest-cost wholesale electricity price for power suppliers. Coal-fired generation this year has been less economical compared with natural gas-fired generation, leading to price-driven coal-to-natural gas fuel switching.
The U.S. electric power sector natural gas cost averaged $3.74 per million British thermal units (MMBtu) in 1H2023, 43.3% ($2.85/MMBtu) lower than in 1H2022, while the electric power sector coal cost averaged $2.52/MMBtu in 1H2023, according to our Short-Term Energy Outlook. The electric power sector natural gas cost has been declining this year, averaging $2.39/MMBtu in June, while the electric power sector coal cost averaged $2.45/MMBtu in June.
Capacity additions have also contributed to the growth in natural gas-fired generation. Between 1H2022 and 1H2023, average U.S. natural gas-fired generation capacity increased by 1.5%, while coal-fired generation capacity decreased by 6.4%, continuing a long-term trend of coal capacity retirements. According to our Electric Power Monthly, over the 12 months ending in April 2023, 9.1 gigawatts (GW) of net natural gas-fired electric power generation capacity additions entered service, of which 93.4% (8.5 GW) were from combined-cycle natural gas turbine plants, which are among the most efficient natural gas plants and help improve the economics of natural gas-fired generation compared with other sources.
In addition to coal, smaller declines in electricity generation from wind (6.3%, or 15.2 TWh), hydropower (6.2%, or 9.0 TWh), nuclear (0.9%, or 3.5 TWh), and petroleum (20.5%, or 1.1 TWh) also contributed to increased natural gas-fired generation in 1H2023 compared with 1H2022, while electricity generation from solar power increased (8.3%, or 5.4 TWh).