This has been the year from hell for coal-fired power and the coal industry. If current projections hold, coal generation in 2020 will be 21% lower than last year and 62% lower than the 2007 peak.
The coal share of the generating mix, which for decades hovered around 50%, will finish the year at 20%, the lowest on record. Coal production will be the lowest since 1964 and down by a quarter just from 2019.
The new year may bring relief. The U.S. Energy Information Administration’s (EIA’s) Short-Term Energy Outlook (STEO) projects that coal generation will recover most of its 2020 losses in 2021, bringing some stability to coal plant operators and coal miners.
The key factor behind a coal power recovery is higher prices for natural gas, which indeed appear likely in 2021. Nonetheless, a coal recovery in 2021 is highly contingent on other dynamics.
A close look illustrates how factors such as fuel inventories, capacity additions, and trends in electricity demand growth could mute the impact of higher gas prices.
A review also shows how coal-fired power, once the bedrock of American power generation, has become dependent on factors- such as winter weather in northeast Asia and the price liquefied natural gas (LNG) commands in Europe-that once would have been considered arcane and irrelevant.
A Recovery in 2020?
The EIA is currently projecting a turnaround for coal generation and coal consumption in 2021. As shown in Table 1, coal megawatt-hours and coal burn (tons) are expected to increase by about 20%, recovering most of the ground lost in 2020, while gas-fired generation drops by 15%.
After accounting for other coal demand sectors and inventory changes, miners are expected to enjoy a 19% increase in production, a reprieve from the 2020 disaster.
Source: Stan Kaplan
View the original article on Power Mag HERE.
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