OREANDA-NEWS. ACoal-fired generation in the largest US power grid in May recovered from the previous month's low but still was 10pc lower than a year earlier.

The year over year decrease in generation in absolute terms resulted in coal plants' share of the PJM Interconnection output falling to 35pc from 40pc in May 2014. The most recent month's share was up slightly from 34pc in April, based on data compiled by the Generation Attribute Tracking System used by participants in the renewable energy credit markets.

Natural gas generation jumped by 29pc in absolute terms, and it made up 23pc of the grid's output, up from 18pc a year earlier. Nuclear plants' share increased to 37pc from 36pc.

May is the latest month for which generation data are available through the renewable tracking system. PJM's market monitor typically releases aggregated generation statistics on a quarterly basis, with a two-month lag.

Total generation in May was 2.9pc higher than a year earlier because cooling demand in the mid-Atlantic region exceeded both seasonal norms and the year-earlier levels. But electricity output by coal plants fell as gigawatts of capacity went off line permanently and dispatch economics favored natural gas-fired generation.

The decrease in coal generation coincides with the initial 16 April deadline power plants had for complying with the Environmental Protection Agency's (EPA) mercury rules. Many operators have chosen to shut down units rather than install costly upgrades. About 8GW of capacity shut down this year in PJM. Another 3.2GW is schedule to go offline next year, when the one-year extension EPA gave to many some plants expires.

Coal capacity in the PJM region dropped to 51GW in May, slipping below installed gas-fired generation for the first time. That suggests coal burn in PJM was below the 10.5mn short tons (9.5mn metric tonnes) the grid consumed in May 2014 based on Energy Information Administration data. The agency has not yet provided May 2015 data.

More than three quarters of PJM coal receipts a year ago originated in the Appalachian basin, with 13pc arriving from the Powder River basin and less than 10pc from the Illinois basin mines.

Federal meteorologists expected the mid-Atlantic sliver of PJM to have higher-than-normal temperatures for the rest of the summer. But sparks spreads analysis shows gas units in August running more profitably, on margin, than coal units in PJM's mid-Atlantic region. Differentials are much narrower between gas and dark spreads in Ohio.