Natural gas ascending quickly as fuel source for electric grid

February 15, 2013

If you want to see the rise of natural gas in power generation, you need look no further than the most recent annual reading of the PJM Interconection.

PJM is the regional transmission organization that coordinates the movement of wholesale electricity in all or parts of 13 states – including all of Pennsylvania – and the District of Columbia.

Formed in the 1920s, PJM is responsible for coordinating and directing the flow of electricity to keep the lights on for about 60 million people in Delaware, Illinois, Indiana, Kenturcky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.

That’s a lot of power to generate from PJM’s members, which include Duke Energy, Duquesne Light, American Electric Power, FirstEnergy and others.

According to an analysis of PJM’s generation by fuel source in gigawatt hours, power generators increased their use of natural gas by 35 percent between 2011 and 2012.

Despite a more than one-third increase in output generated by natural gas, coal remains the undisputed king for power generation across PJM, but natural gas is closing fast.

But before gas can surpass coal, it will have to move past nuclear, which holds the No.2 spot as a fuel source in the PJM lineup.

Coal generated a total of 360,306.2 GWh or 46.9 percent of output in 2011, falling to 332,762 or 42.1 percent of total output in 2012, for a 7.6 percent decline over the two years.

Nuclear held down second place with 262,968.3 GWh or 34.2 percent of power generation iin 2011, increasing to 273,372.2 GWh or 34.6 percent last year, a 4 percent gain over the two years.

By comparison, in 2011 natural gas contributed 108,030.2 GWh or 14.1 percent of total energy output.

Last year, natural gas output grew to 146,007 GWh, or 18.5 percent of total output for a 35.2 percent increase over the past two years.

But natural gas definitely has the attention of the power industry.

In an interview with Bloomberg News earlier this month, Jim Rogers, chief executive of Duke Energy, the country’s largest supplier of electricity, attributed the rise of natural gas in the fuel mix of power generation to the abundance of domestically produced shale gas, particularly from the Marcellus Shale play.

“Shale gas has been transformative in the U.S.,” Rogers said. “It’s fundamentally changed the cost of electricity. We (Duke) are today dispatching natural gas before coal – in our history, we have never done that.”

As for Pennsylvania, which currently has 37 gas-fired power plants in operation, the addition of more plants appears to be proceeding steadily.

According to information provided by Kevin Sunday, spokesman for the state Department of Environmental Protection, the agency is currently reviewing nine applications for gas-fired generators, which represent a total capacity of 7049 megawatts.

Sunday said that if all nine of the current applications pass the approval process and are built, they would more than make up for the output of 13 coal-fired plants that have either been recently retired or are scheduled for retirement over the next few years across the state. According to DEP figures, those plants represent 4,820 MW of generating capacity.

The ascendency of natural gas in PJM’s fuel generation mix isn’t the only notable item in the table, however. While far below the output of coal, natural gas and nuclear plants, renewables are picking up steam in the output mix, according to the PJM chart.

Wind’s output in 2011 was 11,561.1 GWh, or 1.5 percent of total fuel generation, moving to 12,633.6 or 1.6 percent of total fuel generation in 2012, a 9.3 percent change in output over the two years.

Solar was the biggest year-over-year percentage gainer in PJM. While it provided only 55.7 GWh in 2011’s generating mix, a nearly imperceptible amount, it quadrupled its contribution to 233.5 GWh last year, a 319.1 percent change in output over the two years.

Michael Bradwell has been business editor for the Observer-Reporter since 1995, and was named editor of The Energy Report in 2012. He joined the newspaper in 1990 as a general assignment reporter in the Greene County bureau and has also worked as a copy editor. A 1974 graduate of Pennsylvania State University with a degree in English, he began his career at the Bedford (Pa.) Gazette. Prior to joining the O-R, he served as public relations director for Old Bedford Village, account executive at two Pittsburgh public relations agencies and copywriter for the country’s largest wholesaler of mutual funds.

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