{"id":1495745,"date":"2024-10-12T13:20:00","date_gmt":"2024-10-12T17:20:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1495745"},"modified":"2024-10-12T13:20:00","modified_gmt":"2024-10-12T17:20:00","slug":"us-electricity-generators-binge-on-ultra-cheap-gas","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/us-electricity-generators-binge-on-ultra-cheap-gas\/1495745\/","title":{"rendered":"US Electricity Generators Binge On Ultra-Cheap Gas"},"content":{"rendered":"

US Electricity Generators Binge On Ultra-Cheap Gas<\/span><\/p>\n

\n

By John Kemp of Kemp Energy<\/a><\/em><\/p>\n

Exceptionally low gas prices have driven gas-fired generation to a record high in the United States, in the process eliminating most of the excess inventories inherited from the very mild winter of 2023\/24. <\/strong><\/p>\n

U.S. electricity generators produced a record 2,069 billion kilowatt-hours (kWh) in the first six months of 2024, an increase of 98 billion kWh (5%) compared with the same period a year earlier.<\/p>\n

<\/a><\/p>\n

Most of the extra electricity came from gas-fired units (+43 billion kWh), solar parks (+24 billion kWh) and wind farms (+19 billion kWh), with smaller contributions from nuclear (+10 billion kWh) and coal (+4 billion kWh).<\/p>\n

<\/a><\/p>\n

Gas-fired units produced a record 857 billion kWh, and accounted for 41% of all generation, which was also a record high, according to data from the U.S. Energy Information Administration (EIA).<\/p>\n

As a result, gas generators consumed a record 6,264 billion cubic feet (bcf) of fuel, an increase of 314 bcf compared with 2023.<\/p>\n

<\/a><\/p>\n

RECORD LOW GAS COSTS<\/strong><\/p>\n

The gas generation boom has been driven by extraordinarily cheap fuel, with prices declining to the lowest for more than five decades in March, after adjusting for inflation.<\/p>\n

<\/a><\/p>\n

Gas generators were able to run for many more hours, including less-efficient single-cycle gas turbines and steam units, which normally only operate at times of peak demand.<\/p>\n

<\/a><\/p>\n

Gas units seized share from coal-fired generators as the gas costs dipped below coal on an energy-contained basis between March and May, the first time this had happened since 1975.<\/p>\n

<\/a><\/p>\n

On average, gas generators are more efficient, requiring 7,740 British thermal units of fuel to produce each kilowatt-hour of electricity, compared with 10,689 British thermal units for coal generators.<\/p>\n

<\/a><\/p>\n

Because of their efficiency advantage, gas units can compete with coal when gas prices are as much as 30-40% more expensive.<\/p>\n

<\/a><\/p>\n

Between March and May, however, gas was 10-20% cheaper, creating an enormous financial incentive to switch to gas.<\/p>\n

<\/a><\/p>\n

SUMMER DEMAND PEAK<\/strong><\/p>\n

Since the start of the third quarter, gas generators have continued to produce record amounts of electricity, mostly at the expense of coal, according to data published by transmission operators.<\/p>\n

In the Lower 48 states, gas units generated a record 540 billion kWh between July and September, up from 525 billion kWh in the same period in 2023.<\/p>\n

Gas generation increased even though total electricity production was broadly flat compared with a year earlier.<\/p>\n

Extra gas generation came at the expense of coal, where generation slipped to 201 billion kWh down from 221 billion kWh in 2023.<\/p>\n

INVENTORIES NORMALIZE<\/strong><\/p>\n

Surging gas generation has combined with slower gas production and an increase in liquefied natural gas (LNG) exports to eliminate most of the surplus fuel carried over from last winter.<\/p>\n

Working gas stocks in underground storage rose by just 430 bcf over the summer quarter, the smallest seasonal increase since at least 2010, and 45% less than the average for the last decade.<\/p>\n

<\/a><\/p>\n

By September 30, inventories were just 185 bcf (+5% or +0.70 standard deviations) above the prior ten-year seasonal average.<\/p>\n

<\/a><\/p>\n

The surplus had narrowed from 537 bcf (+21% or +1.42 standard deviations) at the end of June and 634 bcf (+39% or +1.36 standard deviations) at the end of March.<\/p>\n

Gas prices have started to climb gradually as the surplus has eroded: front-month futures prices have averaged $2.80 per million British thermal units so far in October up from a low of $1.75 in March.\u00a0<\/p>\n

But futures are still below the inflation-adjusted averages of $3.24 in October 2023 and $6.52 in October 2022, and barely above the cost of coal.<\/p>\n

Gas generation is likely to continue setting record highs unless and until futures prices climb above $3.00-3.25 on a sustained basis.<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nSat, 10\/12\/2024 – 09:20<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/us-electricity-generators-binge-ultra-cheap-gas<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

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