US natural gas generation in 2021 saw its first year-over-year decline since 2017 of 7% due to higher natural gas prices and increased competition from renewables, the Energy Information Administration (EIA) said on Tuesday.
Natural gas-fired generation has been facing increased competition from renewable generation in the US because of recent record-high capacity additions to wind and solar power plants.
In the first four months of 2021, natural gas-fired generation in the Lower 48 states averaged 3,394 gigawatt-hours (GWh) per day, data from the agency’s Hourly Electric Grid Monitor showed.
Overall, the country’s electricity generation during the period increased 6.6% compared with 2020 because of colder winter weather.
Between May 2020 and February 2021, an increase of 15% to 22.5 gigawatts (GW) of combined net wind and solar electric generating capacity additions came online in the US, according to the data.
“We expect an additional 28.7 GW of wind and solar capacity to enter service during the remainder of 2021, based on the latest Preliminary Monthly Electric Generator Inventory,” the agency said.
US natural gas prices have risen since April 2020 because of lower natural gas production and higher winter heating demand compared with the previous winter heating season that ran from October 2020 to March 2021, the agency said.
The US natural gas benchmark price at the Henry Hub averaged $2.83 per million British thermal units (MMBtu) from January through April 2021, despite a cold snap and record-high prices in mid-February.
Higher US natural gas prices have made natural gas-fired generation relatively less competitive compared with coal-fired generation, prompting natural gas-to-coal fuel switching.
Coal-fired generation has increased nearly 40% in the country during the first four months of 2021 compared with the same period in 2020 and accounts for 23% of total generation, the EIA said.
“We expect declines in natural gas-fired generation to continue through 2022. In May’s Short-Term Energy Outlook, we forecast natural gas-fired generation will decline 9.1% in 2021 and a further 0.7% in 2022,” it said.
By Sibel Morrow