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Lower-cost natural gas in the first half of 2019 will result in generally lower prices for wholesale electricity the rest of this year compared to 2018, according to federal energy officials.
For the first six months of this year, the average U.S. cost of natural gas delivered to power generators was 9% lower than the same period in 2018—a trend that will continue until year’s end, said this month’s Short-Term Energy Outlook released by the Energy Information Administration.
“EIA expects the delivered cost of natural gas during the second half of 2019 to be 31 percent lower than last year,” the report said. Specifically, in the Southeast, forecasts of wholesale electricity prices are 1% lower than in 2018, and in New England, 28% lower than in 2018.
Coal production will also fall during the second half of this year. Production is expected to be 328 million short tons (MMst), which is 15% less than in the second half of 2018. EIA also predicts coal consumption will fall to 593 MMst in 2019 and 448 MMst in 2020.
“International demand for U.S. coal is dampened by high Atlantic freight costs in the near term and increased uncertainty in the metallurgical coal market in the longer term,” the report said.
U.S. electric power generation from renewables other than hydropower are expected to grow from 409 billion kilowatt hours (kWh) in 2019 to 467 billion kWh in 2020. In EIA’s forecast, Texas accounts for 19% of the U.S. non-hydro renewables generation in 2019 and 21% in 2020. The Midwest and central power regions each have shares in the 16%-17% range of the U.S. generation total from non-hydro renewables.
In addition, coal shipments to the U.S. power sector continue to fall, according to the latest EIA power sector survey released Sept. 13. Last year, the U.S. electric power sector received nearly 600 MMst of coal, the lowest level since 1983. Rail was the delivery method for more than 75% of shipments. The remainder was shipped by other methods, including river barge and truck.