The price difference between coal and natural gas is said to be one of the prime reasons behind the rise as the market is witnessing a jump in the use of coal in the power generation sector and a decrease in the use of natural gas.
Compared to March 2012, electricity demand has increased by 2% in March 2013. The electricity generation from the natural gas-fired plants has dropped by 11% in March 2013, when compared with last year’s performance for the same month.
Genscape analyst Stephen Maestranzi said for the first time in the history, it was noted that natural gas fired electricity was as high as coal fired electricity in the month of April 2012, but as the gas prices reached $4.00/MMBtu the economics changed, compared to last year’s.
"Genscape estimates that over the past year gas prices have risen more than 60%, while coal prices are only up about 2%. As a result, in March coal fired generation was 53% higher than gas fired generation," Maestranzi added.
"At this point last year, natural gas was economically competitive with nearly every delivered coal – even low cost Powder River Basin coal. Now only higher heat content coal delivered to the Southeast US remains out of the money."
Renewable energy generation too has decreased by 14% in March of 2013 versus last March.
