Converging Gas and Power Markets

The Energy Information Agency (EIA) reports that the US government’s most recent forecasts project that some 49 gigawatts of coal-fired generation capacity could be retired within the next eight years – facilities driven from the market by a combination of increased EPA rulemaking and cheaper natural gas.  In the period from 2002 to 2010, more than 25 utility-owned coal plants were shuttered, losses offset by construction of 80 new utility owned natural gas fired facilities and renewable sources, primarily wind.  Since 2010, and with the recent dramatic drop in natural gas prices in North America, natural gas displacement of coal as a primary fuel for power generation has been accelerating.  In April of this year, the EIA reported that for the first time ever, natural gas and coal provided an equivalent share of the power produced in the US, each providing about 96 million megawatt hours in that month.
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