Friday, March 10, 2017

Coal-to-Gas-to-Coal Switching in the Midwest (MISO) Region

We saw clear and prompt evidence of a switch from gas to coal as power generation feedstock in MISO when gas prices began their sharp rise in late NOV 16.  Then again when prices fell in FEB 17.

Now, with strip prices back above $3 (but HH Spot lagging at the moment), will we see a reversal back to coal domination?

Not yet.

Here are two angles on the question.  The first is the demand adjusted scatter plot, which is indicating that gas is within about 5% of the thermal power market share it held last March, when gas prices were below $2.

The second shows the daily market share of thermal power generation since last November.  Gas was at a 40% market share vs coal back in early November, and then dropped as low as 25% around New Year's Day.  It started rising steadily at the beginning of February, and was near last year's levels, around 40%, by March.  It's been maintaining a high 30's share, clocking 38.4% yesterday.

As higher strip prices translating into the spot market, shouldn't we see gas lose marketshare?