A historic November cold snap sent temperatures below freezing in 75% of the Lower 48 states, with the price of natural gas jumping from less than $2.00 per million British thermal units (MMBtu) on average in October, to a mid-November high of $5.11/MMBtu at the Tetco M3 hub, located in northeast Pennsylvania, in the PJM Interconnection.
Prices rose roughly $1.00/MMBtu and reached nearly $3.00/MMBtu at the Chicago Citygate hub in the Midcontinent Independent System Operator (MISO), Kallanish Energy reports.
These price increases resulted in coal-fired power generation replacing natural gas-fired generation starting in late October in both of these regional transmission organization markets (RTOs), the Energy Information Administration reported Monday.
Natural gas-fired generation rises in PJM, MISO
Throughout all of 2019, natural gas-fired generation has accounted for an increasing share of power generation in PJM and MISO, averaging 35% in PJM and 27% in MISO.
This summer, the natural gas market in the Lower 48 states experienced record-high natural gas consumption, relatively low natural gas prices, retirements of coal-fired generation, and increasing natural gas-fired capacity.
In October, when regional natural gas prices were particularly low because of moderate autumn temperatures, natural gas-fired generation in MISO reached its highest level for 2019, at 36%.
Coal-fired generation rises
However, as natural gas spot prices in the PJM and MISO regions approached nearly $2.70/MMBtu in late October, the coal-fired generation share increased from its earlier lows.
PJM covers all or parts of 13 states and the District of Columbia, in the U.S. Mid-Atlantic region. Cold weather in that region caused the natural gas spot price at the Tetco M3 trading hub to rise from less than $2.00/MMBtu at the end of October, to a high of $5.11/MMBtu on Nov. 13, the peak of cold temperatures.
On Nov. 9, the share of natural gas-fired generation in PJM decreased to 34%, its lowest level since May. Conversely, the share of coal-fired generation increased to 31% on Nov. 14, the highest coal share since March, EIA reported.
Gas-fired generation higher
MISO covers much of the U.S. Midwest and part of the Gulf Coast. For several days in October, the share of natural gas-fired generation was higher than the share of coal-fired generation in the region for the first time in 2019.
With low natural gas spot prices, natural gas-fired generation peaked at a 36% share on Oct. 14. In contrast, coal’s generation share fell to 25% on Oct. 12 because natural gas prices were lower than $2.00/MMBtu and wind generation was strong.
However, by November, lower wind power and higher natural gas prices made coal-fired generation more economically attractive. The Chicago Citygate natural gas spot price rose to nearly $3.00/MMBtu on Nov. 7, or $1.00/MMBtu higher than the average October price.
Higher natural gas prices contributed to the natural gas generation share falling to 22% on Nov. 10, its lowest share in eight months.
Coal’s generation share increased from its October average of about 32%, to a November average of 38% through Nov. 13.
This post appeared first on Kallanish Energy News.