Natural gas isn’t the only power plant fuel to catch fire this year. Thermal-coal prices have soared from Appalachia to Australia, threatening to further increase manufacturing costs and electricity bills this summer.
So far this year, coal futures to northwestern Europe have risen 137% to $323.50 per metric ton. The benchmark price set at an Australian export facility in the Pacific is up 143% this year. Cash prices in central Appalachia have climbed 40% in 2022 – and more than doubled in the past year – to $129.65 a ton last week, the highest price on record.
Electricity demand has returned from the pandemic to reap gains as Ukraine battles war, which prompted European power producers to stock up before a ban on Russian coal exports began in August.
Meanwhile, investment in mining has dwindled amid hopes that coal will continue to lose market share to renewable sources, such as wind farms, and cleaner-burning natural gas.
This has reduced the stock.
In the US, coal reserves at power plants fell to their lowest level since the 1970s in September and have been held down by strong demand. According to the most recent data from the Energy Information Administration, power-plant coal inventories in March were down about 44% from the 13-year average.
“Not only is the domestic market looking for coal for power generation, but there are international markets as well,” said Andy Blumenfeld, McCloskey’s director of data analytics by OPIS. The pricing service is part of News Corp.’s Dow Jones & Company, which publishes the Wall Street Journal.
Although coal production is expected to increase this year compared to last year, utilities are having trouble finding fuel due to overcrowding at railheads and ports. Funding for speculative coal production has dried up in recent years. Miners now sell most of their production in advance.
“A lot of mining companies are very close, if they haven’t already, to be sold for this year,” said Mr. Blumenfeld.
Usually the fix for higher coal prices is the switch to burning more natural gas, which is the predominant electricity generation fuel. But gas prices have risen since the pandemic for the same reasons as coal. US natural-gas futures are up 133% this year and are trading at their highest level since 2008.
Sheetal Nasta, an analyst at RBN Energy, said higher prices for both coal and natural gas have reduced the need for fuel switching between power producers and made for quite volatile markets in the electricity business.
“As long as the gas market remains tight and coal remains unavailable to meet the growing power demand, there is no limit to the high prices of both the fuels,” she said.
Demand for coal is also growing at a slower rate than expected growth of renewable-energy installations. The US power sector has retired nearly a third of its coal-fired generation capacity since 2010, and the other 6% is set to go offline this year. However, some of those closures are being rescheduled.
Utility owner NiSource Inc. said last month that it would push back until the end of 2025 the retirement of two coal-burning units at the Indiana generating station that were to be shut down by the end of next year and replace their production was. solar farms. NiSource said it would continue to burn coal while awaiting delays in solar plant construction, thanks to a Commerce Department investigation into whether Chinese solar producers illegally bypassed tariffs by routing operations through other countries. are doing.
In New Mexico, the public utility PNM said it would wait until September 30 to shut down one of its coal-fired units instead of this month as planned, so that it would turn to electricity for hopes of another hot summer. able to meet the demand. ,
PNM also blamed slow solar growth, saying that having coal plants available during the summer averts an “otherwise unavoidable energy shortage”.
This story has been published without modification to the text from a wire agency feed