US coal retirements put natural gas to the test

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10 August 2022

US coal retirements put natural gas to the test

Report summary

Economic gas-to-coal displacement has historically provided a powerful balancing mechanism during the summer injection seasons for North American gas markets. Higher gas prices would normally result in utilities switching generation from gas to coal units. However, as Henry Hub prices rallied higher in summer, the economic displacement stalled with fewer coal units dispatching. As the US power market continues to transform with increased penetration of renewable generation, the capability of the gas market to support power demand throughout the year will be tested by mounting coal unit retirements.

Table of contents

  • Where’s the ceiling?
  • Gas-to-coal switching stalled
  • Changes in store for seasonal dispatch

Tables and charts

This report includes 4 images and tables including:

  • Henry Hub gas price in the short term goes off the rails as it searches for a new ceiling
  • US gas production response to higher prices more muted than in the past
  • Price elasticity of gas power burns disappears at higher prices
  • US gas demand seasonality (bcfd)

What's included

This report contains:

  • Document

    US coal retirements put natural gas to the test

    PDF 1.31 MB