Analysis: Coal burn falls in central US power grid

OREANDA-NEWS. June 11, 2015. Coal burn for electricity generation in the Southwest Power Pool is trailing year-earlier levels as moderate weather has kept load in check and wind output has grown.

Coal in the three weeks ended 7 June accounted for 60pc of the pool's generating mix, down from 63pc in the same period last year, based on grid operator's data. Coal burn in absolute terms fell by 16pc year over year in the pool's balancing area that covers part of nine states in the Gulf coast, southwest and plains regions.

Nuclear and natural gas-fired generation was also lower by 16-17pc on the year, while wind output increased by 27pc. Natural gas' share in the supply mix fell to 18pc from 19pc while wind's increased to 14pc from 10pc.

Cooling load in late May was lower than normal in most of the pool's territory, National Weather Service data show. Cooling demand has increased in early June but coal's share in total generation has not changed much.

Powder River basin (PRB) coal accounted for 90pc of first quarter fuel receipts in the pool's territory, according to Energy Information Administration data.

Prompt quarter PRB prices are about 10pc lower than a year ago but declines are more significant for natural gas prices, at 41pc year-over-year. Coal in the second quarter was still the less-expensive fuel but the differentials are closing fast in the Gulf coast portion of the southwest pool.

Coal remains the primary generating fuel in the pool and typically is the marginal fuel in its northern part that includes Kansas, Nebraska and parts of Missouri. Gas sets prices more often in the southern portion of the pool.

Coal last year accounted for 35pc of installed capacity on that grid, or about 22.5GW. The southwest pool will lose 1,458MW of coal-fired capacity in 2015-16, according to Argus' coal plant retirements database.