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Coal Generation Dipped Nearly 12% in 2012 as Gas, Wind, Solar Gained


The fuel mix for power generation in the United States continues to evolve away from coal, which has historically been the largest source for electricity production. While natural gas has been eating into coal’s market share, net generation from wind and solar also has increased, according to an SNL Energy analysis of the most recently available U.S. Energy Information Administration and FERC annual data on fuel burn and net generation.

Change in Net Generation by Fuel Type (2011-2012)Generation from solar plants more than doubled year-over-year in 2012 to about 4.2 million MWh, with 175 projects completed, according to SNL Energy data. Wind generation increased by more than 16% to about 139.6 million MWh in 2012.

Net generation from natural gas saw a 20% year-over-year increase in 2012, accounting for more than 29% of the total generation, compared to 24% in 2011. Due to natural gas prices seeing historic lows in 2012, as well as new environmental regulations targeting coal-burning plants, utilities opted to increase the use of cheaper natural gas-fired power plants, with a large number of power plants switching their primary fuel source to natural gas. In 2011 and 2012, more than 5.5 GW of power plant capacity switched to burning primarily natural gas from another form of fossil fuel.

Coal recorded the largest absolute decrease in net generation among all fuel types, falling by more than 209.6 million MWh between 2011 and 2012, an 11.97% decline. The market share of coal-fired generation as a percentage of total net generation in the U.S. also declined, falling to almost 38% from more than 42% in 2011.

Examining a broader time frame, an SNL Energy analysis of fuel-burn data using annual EIA 923 filings from 2008 to 2012 shows that coal burned by power plants in the U.S. declined by more than 22% during that five-year period, while natural gas burned by power plants increased by almost 36%.

Power plants in the PJM Interconnection LLC region saw the largest percentage increase among operating regions in the quantity of natural gas burned between 2008 and 2012, with an increase of just more than 162%. The historically low level of natural gas prices in 2012 was a catalyst for increased competition between gas and coal in the PJM dispatch curve, as natural gas-fired power generation became increasingly economical.

Natural Gas burned bt RTO (MMBtu per year)PJM continues to be the region most affected by coal retirements, with 12,370 MW of coal capacity slated to be closed between 2013 and 2022. Midcontinent Independent System Operator Inc. saw the second-highest percentage gain in the volume of gas burned by its power plants between 2008 and 2012, with an increase of almost 60%. Coal plant retirements in the region have forced a shift toward gas-fired generation, and MISO saw its net generation from natural gas plants increase by just under 27% year-over-year in 2012.

While PJM and MISO recorded the largest percentage increases in gas burned over the five-year period, ISO New England Inc. saw the largest percentage decline in the annual quantity of coal burned, at about 79%.

As coal consumption for power generation declined in ISO-NE, reliance on natural gas has increased, with the region burning more than 495 million MMBtu of natural gas in 2012, compared to roughly 407 million MMBtu in 2008. Natural gas is the region’s dominant fuel, producing more than 50% of regional electricity in 2012, according to SNL Energy data.

New York ISO had the second-largest decrease in the volume of coal burned by its power plants between 2008 and 2012, with a decline of almost 73%. Coal retirements in NYISO due to environmental regulations have played a major part in the decline of coal burn in the region.

Power plants not located within any specific RTO region also saw a large decline in the amount of coal burned over the five-year period, seeing a decrease of nearly 28%, while also recording a 43% increase in gas burned between 2008 and 2012.