U.S. coal-fired generation will be down 6% in 2022 compared to 2021, according to the latest Short-Term Energy Outlook from the U.S. Energy Information Administration (EIA).

2021’s jump was more the exception in recent years. Coal-fired generation declined each year between 2014 and 2020 yet rose 16% in 2021 because of increased electricity demand and higher natural gas prices coming out of the pandemic.

Between 2020 and 2021, the delivered cost of natural gas for power generators nearly doubled while the delivered cost of coal grew by only 3%. The increase in natural gas prices caused the share of total natural gas-fired generation to fall to 37% in 2021 from 39% in 2020. In contrast, coal averaged 23% of U.S. generation in 2021, up from 20% in 2020.

EIA also noted costs for natural gas-fired generators are more dynamic than those of coal. Natural gas is bought mostly in the daily, monthly, and seasonal markets to align fuel needs with power sales, which can be highly uncertain. Costs for coal-fired generators are more static because delivered coal prices are mostly based on long-term contracts and remain relatively steady for longer periods.

So far in 2022, as reported to EIA, the delivered price of natural gas has increased more in percentage terms than the delivered price of coal, but the agency said natural gas prices for generators may decrease substantially in the fourth quarter.

Despite higher natural gas prices, EIA expects natural gas-fired generation to increase slightly in 2022, and its share of annual U.S. generation will increase from 37% to 38%.

“The electric power sector is not moving away from natural gas as we expected previously because coal-fired power plants, which have historically acted as a substitute for natural gas generation, have not been receiving enough coal to meet demand,” EIA researchers said.

EIA also noted railroad challenges which have disrupted coal shipments to power plants, further constraining generators’ ability to replenish fuel and increase generation. During the first seven months of 2022, coal inventories at power plants averaged 23% lower than in 2021, according to EIA.

This post appeared first on Power Engineering.