There is a strong battle between coal and natural gas as power substitutes. As the price of natural gas has fallen, the demand has gone up significantly in the power sector. Natural gas can be used for on peak power generation and competes directly with coal. If fact, natural gas became cheaper than all coal sources earlier in the year. The success in power generation switching has now come back and pushed prices above coal. The result is that running coal for power is now cheaper.Gas demand should decline until prices again fall below coal at which time there will be switching. The world is a little more complex but the switching issue will be a major decision variable in any gas or coal trade.
No comments:
Post a Comment