EIA: Natural gas to surpass coal as U.S. largest power generation energy in 2016

Natural gas is expected to replace coal as the U.S. largest power generation energy in 2016, the first time on an annual basis, mainly boosted by lower natural gas prices.

"2016 will be the first year that natural gas-fired generation exceeds coal generation in the United States on an annual basis," said the U.S. Energy Information Administration (EIA) on Thursday based on its Short-Term Energy Outlook.

Natural gas generation first surpassed coal generation on a monthly basis in April 2015, said EIA, adding the generation shares for coal and natural gas were nearly identical in 2015, each providing about one-third of all electricity generation.

Coal has been the dominant energy source for generating electricity in the United States for decades, and the rising share of natural gas in power generation was "mainly a market-driven response to lower natural gas prices," said EIA.

Between 2000 and 2008, coal was significantly less expensive than natural gas, and coal supplied about 50 percent of total U.S. generation, said EIA, adding the gap between coal and natural gas prices have narrowed since 2009, as booming shale gas dragged down natural gas prices.

U.S. environmental regulations have played a secondary role in driving coal's declining generation share over the past decade, which may play a larger role in conjunction with market forces, said EIA. Enditem