How the recession reshaped U.S. electricity production
The survey offers a snapshot of the impact the recession had on energy markets and shifts in the power supply as coal costs rose and natural gas prices plummeted. Industrial demand for electricity, for instance, dropped by 9.1 percent in 2009 to the lowest level in 22 years.
Expectations that Congress would pass legislation to impose a cap on greenhouse gas emissions may have also encouraged a move away from carbon-intensive electricity production, the report stated.
Electricity produced from coal-fired power plants fell by 11.6 percent in 2009 from the previous year while generation from natural gas increased by 4.3 percent, according to the report.
“In 2009, annual average natural gas wellhead prices reached their lowest level in seven years,” the report said. “Increased supply due to the availability of shale gas, coupled with mild winter temperatures and higher production, and storage levels, and significant expansions of pipelines capacity also worked to put downward pressure on natural gas prices.”
As Southeastern states switched to natural gas, coal’s share of the nation’s electricity production fell to its lowest level since 1978.
That may have been bad news for coal companies but there was an environmental payoff in a 34 percent drop in emissions of the pollutant nitrogen oxide and a 24.7 decline in sulfur oxide emissions from coal-fired power plants. Overall, NOx and SOx emissions fell 28.1 and 23.8 percent, respectively.
Federal stimulus funding for renewable energy, meanwhile, helped boost wind energy production by 33.5 percent, bringing wind’s share of U.S. electricity generation to just under two percent.
Overall, renewable energy generation from wind, solar and biomass grew 14 percent last year.
But as coal operators have found, continuing low natural gas prices — currently around $3.77 per million BTU — will affect the competitiveness of solar and other clean energy sources.
“If you have natural gas at $12 bucks and petroleum prices at $150 bucks (a barrel), a lot of renewable energy make sense,” Theodore F. Craver, Jr., the chief executive of Edison International, told me in a recent interview. “That is the biggest signal that puts the whole equation into question. Because the relative cost of many of the technologies out there is so much in excess of standard traditional way of producing electricity.”
Photo: Todd Woody