The US Energy Information Administration’s Hourly Electric Grid Monitor indicates that in the lower 48 states, power generated by natural gas-fired plants reached 6.37 million MWh on July 21, 2022. Despite relatively high natural gas prices, demand for natural gas for electricity generation was strong throughout July as a result of above-normal temperatures, reduced coal fired generation, and recent gas-fired capacity additions.
US electricity demand usually peaks in the summer because of demand for air conditioning. This past July was especially hot, ranking as the third hottest on record in the USA. Before this year, the previous daily peak for natural gas-fired electricity generation had occurred on July 27, 2020, when natural gas prices were historically low.
In July 2020, the Henry Hub natural gas price averaged $1.77 per million British thermal units (MMBtu). This July, the natural gas price averaged $7.28 /MMBTU. Typically, higher natural gas prices reduce natural gas price competitiveness relative to other sources, especially coal.
This summer, coal-fired power plants have not been on line as much as in prior summers. Continued retirements of coal-fired generating plants, relatively high coal prices, and lower-than-average coal stocks at power plants have limited coal consumption. In May, coal inventories at power plant s averaged 20% lower than the prior-year levels.
New capacity has increased the availability and use of natural gas-fired electricity. Over the past 10 years, developers have added about 62 GW of combined-cycle gas turbine capacity. The increased number of combined-cycle gas turbines in use has led to some efficiency gains and lower conversion losses.