Tuesday, March 11, 2014

Coal vs Natural Gas: Texas Edition

The ERCOT region, which encompasses over 85% of the Texas electricity market, releases timely data on prior month generation.  This week's release of February 2014 showed natural gas lost market share to coal, despite a 17% increase in total generation for the month vs Feb 2013.

The data showed that total fossil fuel market share was up 2.3% month-on-month, and 1.6% vs Feb '13.
This is a troubling development for the thesis that higher gas prices this year will not lead to significant fuel switching in the power sector.  

On the heels of this data, ERCOT also released a report showing that their projections of demand for the rest of the decade are proving to be too high, primarily due to conservation and efficiency.

With another 8,000 MW of wind scheduled to come online over the next three years in ERCOT, the future of gas fired generation looks a little darker.