Coal remains king for utilities, but natural gas makes inroads on its market share

Coal remains king for utilities, but natural gas makes inroads on its market share

Daniel Cusick, E&E reporter
Published: Thursday, January 30, 2014

Even as coal claims a smaller share of the total electricity fuels market, utilities in 37 states purchased more than 433 million tons of coal for power generation in 2012, accounting for $19.4 billion in sales, according to a new analysis from the Union of Concerned Scientists.

Most of that coal went to power plants in the Midwest and South, where utilities in eight states spent in excess of $1 billion to keep coal-fired generators running in 2012, according to the UCS study titled "Burning Coal, Burning Cash." The largest net importers of coal were Texas, North Carolina, Georgia, Missouri and Florida, followed by Michigan, South Carolina, Alabama, Tennessee and Wisconsin.

While coal remained the No. 1 fuel for electricity generation nationwide, data show that utility expenditures on coal in 2012 were 25 percent lower than in 2008, when the group made its first state-by-state assessment of utility coal imports.

Much of the drop-off in coal consumption over that period was offset by a rise in natural gas use by power generators as well as growing markets for renewables like wind and solar power, Jeff Deyette, UCS's assistant director for energy research, told reporters on a Web-based seminar hosted by the Southern Alliance for Clean Energy.

Perhaps the most dramatic case of fuel switching occurred in Georgia, where the state's power supply shifted from a 63 percent reliance on coal in 2008 to 33 percent in 2012, according to UCS. Yet even with the state's coal-to-gas shift, Georgia imported $1.7 billion worth of coal in 2012, with only Texas and North Carolina importing more coal.

In the Midwest, Michigan was the most coal-dependent state in 2012, importing 21 million tons of coal at a cost of $1.2 billion. Roughly half of Michigan's total power generation came from coal-fired units in 2012, according to the report, down from 61 percent in 2008.

While Deyette said the trend toward reduced coal imports by electric power producers will benefit the environment, especially with respect to utility-sector carbon emissions, he warned that simply replacing coal with gas-fired generation is not a viable long-term solution to U.S. energy security.

Concerns about gas price volatility

"While switching from coal to natural gas offers some near-term air quality and cost benefits, there is growing evidence that an over reliance on natural gas poses significant risks to consumers, the economy, and the climate," UCS states in the report. In addition to being subject to price volatility, "with potentially significant consequences for consumers and the economy," the report says "natural gas does not offer a long-term solution to global warming."

"In contrast, renewable energy and energy efficiency provide virtually emissions-free power at stable and affordable prices, provide substantial economic benefits, and allow states to invest in innovative clean energy technologies close to home," the report continues.

Of the 433 million tons of coal sold to U.S. utilities in 2012, most of it came from three states: Wyoming, West Virginia and Kentucky, according to the analysis. Utilities in seven states burned coal imported from other countries, notably Colombia, accounting for $464 million in sales, according to the report.

Among the top utility purchasers of coal in 2012 were Southern Co., which operates coal-fired plants in Georgia, Alabama, Mississippi and Florida, followed by Southeast heavyweights Duke Energy Corp. and the Tennessee Valley Authority.

Other utilities with more than $1 billion in coal imports for 2012 include New Jersey-based NRG Energy Inc., which owns large coal plants in Texas and Louisiana as well as a handful of smaller plants in the mid-Atlantic, and Midwest regional utilities American Electric Power Co., Ameren Corp. and FirstEnergy Corp.