MISO production share for coal up 6 percentage points

Weekly coal production in the United States exceeds 11.9 million tons in January

CAPP coal price down about 5% from Q4 2021 average

Coal outpaces natural gas production in central U.S. independent system operator territories in 2022 as a rebound in production and lower prices make fuel more competitive.

Coal’s recent upward trend has been most clearly apparent in the Midcontinent Independent System Operator where fuel has captured around 37% of total generation share since early January – a gain of nearly six percentage points from December. , according to ISO data.

During the same two-month period, gas market share remained roughly unchanged at around 30%, with coal taking over from declining nuclear and wind generation in MISO since the start of the new year.

Since the late fall months, however, the share of natural gas production in MISO has declined, falling about two percentage points since October and November as producers seek cheaper options.

MISO is not the only ISO where coal production is increasing. A similar trend is underway in the Southwest Power Pool where coal has captured much of the upside from a sharp drop in wind generation in 2022.

The recent impetus for coal-fired generation comes as stronger production and lower prices this year have recently given the fuel a renewed edge in the generation stack. In the fourth quarter of 2021, coal market share declined, likely partly fueled by supply constraints and high prices.

Manufacture, price

Since the start of 2022, coal production has surged. In mid-January, US weekly production briefly topped 11.9 million sts, rebounding strongly from a drop at the start of the year to just 9.75 million sts earlier in the month.

While the New Year’s decline and subsequent rebound in coal production appears to be a historic trend, January’s rebound in production lifted production above the weekly average for Q4 2021 at just 11.25 million st, according to data from the US Energy Information Administration.

If sustained, the recent weekly production gain of around 500,000 to 600,000 sts from its fourth quarter level could further depress coal prices, potentially giving fuel an additional advantage over gas in the production stack.

Already since the start of 2022, coal prices in central Appalachia have fallen to around $90.50/st, from a 13-year high in the fourth quarter, when prices averaged above $95/st, according to data from S&P Global Platts.

gas burn

Despite recent gains in coal-fired power in the Midwest, gas-fired power usage in MISO has been exceptionally strong this winter, consistently exceeding the previous three-year average.

From November 1 to date, energy consumption in MISO has averaged more than 3.5 1,000 cfd, or approximately 15%, or nearly 500 MMcf/d, above average over three years. Compared to last winter, burns are up by more than 550 MMcf/d.

The surprising strength of gas-fired power consumption in MISO, despite the recent coal boom, comes as mid-continent coal-fired plants continued to retreat last year – another factor that may have be limited coal capacity in the late fall months. In the past 10 months alone, some 13 MISO coal-fired units have been retired, taking approximately 1,375 MW offline across ISO’s entire footprint.