2017 Coal Fired Unit Closures (IEFFA)

46 coal-fired generation units will close at 25 electricity generation plants across 16 states over the next few years, either by transitioning to natural gas fired units or complete closures. These closures will significantly increase the demand for natural gas-powered generation. Even though supplies are abundant, the demand for transporting natural gas throughout the Northeast and Midwest will add upward pressure on natural gas markets.

However, the increase in demand for natural gas doesn’t stop due to coal-fired unit closures. In the past five years, nuclear generation operators have shut down 6 reactors and plan to shut another 6 reactors over the next 5 years because nuclear units cannot compete economically with gas-fired plants.

With the closures of nuclear plants and coal-fired units, the percentage of electricity generation fueled by natural gas nationally will expand well beyond the current 34% over the next decade.

With abundant supplies of natural gas throughout the Northeast and Midwest, and increasing demand for power generation, the need for additional infrastructure to deliver the commodity to generators as well as export facilities will also increase.

The need for additional and expanded infrastructure has generated numerous projects throughout the United States. For example, in Pennsylvania, the Atlantic Sunrise Pipeline project is scheduled to be completed in mid-2018 connecting the northeastern Marcellus production areas to the Transco line. The completion of this pipeline will transport shale gas from northeastern Pennsylvania to markets in the Mid-Atlantic and Southern states. Other notable and rather large pipeline projects such as the Algonquin and Rover Pipeline expansions will increase the capacity to transport much needed natural gas to utilities, generators and end users.

2018 Coal Fired Unit Closures (IEFFA)

Domestic demand is only part of the story. Significant increases in net exports to Mexico and burgeoning LNG overseas exports are projected to increase demand on US natural gas supplies by 16% (to around 95 bcf/day) between 2017 and 2021.

While we have enjoyed historically low natural gas prices for the last 5 years, all indicators show greater upward pressure in future markets as demand is projected to increase across the board.

In our view, there is only one direction natural gas and electricity prices can go in the future and that is up.  This is an historic opportunity to take advantage of current low prices to lock in long-term savings as well as eliminating market risk.

You should be discussing your long term buying strategies for natural gas and electricity with your broker or energy consultant.

Call us to talk about how our proprietary reverse auction system – The Energy ExchangeSM guaranties that you will see every price from every (viable) supplier in your utility. By definition, if you’ve seen all the prices available to you one of them must be the lowest price.

 

 

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