NatGas and Electricity

Energy is again a focus of the world following the Russian invasion of Ukraine. Much of Europe has become dependent on Russian natural gas but there is an opportunity for U.S. producers to export LNG. This post will review U.S. electricity generation and how natural gas has replaced coal in recent years.

The chart shows 20 years of data. I use the 12-month rolling average to smooth out seasonality in order to highlight the overall trend. Electric power generation has been flat but the mix has changed. Coal use has been cut in half while natural gas has doubled in the last 15 years. Wind and solar are growing rapidly but from a small base. In its Annual Energy Outlook 2021, the EIA projects electricity generation growth and that natural gas will continue expanding as a fuel for electricity while renewables growth will exceed that of gas.

Although natural gas is a fossil fuel, it is cleaner than coal, providing a bridge to renewables. The short and intermediate periods for natural gas appear strong with increased power generation in the U.S. and likely additional LNG exports.