Beyond the current mild weather, a portion of the power sector’s weakness in early November can be attributed to the continued to return to coal as a fuel source that has occurred due to higher gas prices.
G&A anticipated a couple of weeks ago, that coal could soon be responsible for a larger proportion of generation in key fuel switching such as PJM, MISO, and SPP.
Sure enough, as can be seen clearly in the chart below, coal’s share relative to gas has climbed to 52.5% over the past week as gas prices average above $3, coal’s highest proportion since late last year.
Some factors that contributed to gas generation’s relative resilience through October were increased nuclear outages, lower renewable generation, and cooler temperatures.
However, at current prices levels, coal will compete with gas to fill in any gaps left by wind or nukes going into the winter.
Source : Gelber & Associates
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