The power coming through your electrical socket is undergoing the fastest, largest change in American history.
A natural gas drilling rig outside Rifle, Colorado (Reuters).
You may not have noticed, but there is something happening to the American electricity supply that we’ve never seen before. Not in 1973 or 1950 or even in 1900. As long as Americans have made electricity, they’ve gotten more of it from coal than from any fuel. While petroleum and natural gas have played huge roles in our energy system, coal’s been responsible for more than 65 percent of the fossil-fuel electricity we’ve generated for most of the last 50 years. (And for big chunks of the 20th century, we made half of all the electricity in this country by burning coal.)
But natural gas is in the process of overtaking coal as the top fuel in America — and fast. The energy system, as you can see in the chart, tends to change slowly. But just look at the last three years in the chart below. That’s the kind of growth that you tend to see in the high tech industry, not energy. That’s an honest-to-goodness hockey stick.
It’s worth noting that the raw numbers that underlie the percentages below are enormous, too. Each percentage point of share is roughly 40 million megawatt hours a year. By comparison, all solar projects in 2010 (the last year stats were available) produced 1.3 million megawatt hours.
The only comparable change in the electricity system occurred when nuclear power plants came online in the 1970s, but even that doesn’t match the speed that natural gas has gained generation share (I checked!). What we’re seeing in natural gas is truly a novel thing.
During the 1990s and 2000s, the cost of natural gas generation decreased with the increased use of efficient combined cycle technology for power generation. Expansion of the natural gas pipeline network decreased uncertainties around natural gas availability. Natural gas production gains from domestic shale gas formations began to rapidly increase starting in 2005. Rising shale natural gas production outpaced natural gas demand growth and contributed to falling natural gas prices, while coal prices rose. Starting in 2009, these trends began to alter the relative economics affecting the dispatch of generators relying on Appalachian coal and natural gas, in the eastern half of the country.
Factors other than fuel prices played important roles in determining which power plants are run to meet electricity demand. One important factor is the availability of generating capacity. Between 2000 and 2012, natural gas generating capacity grew by 96%. In contrast, additions to coal capacity were relatively minor during that period, and petroleum-fired capacity declined by 12%. Other factors include: generators’ nonfuel variable operating costs, startup/shut down costs, emission rates and allowance costs, transmission constraints on the electricity grid, and reliability requirements. Electricity system operators evaluate all of these factors when determining which plants and fuels to use.