Compared to projections from last year, an Early Release Overview of the Energy Information Administration’s (EIA’s) Annual Energy Outlook 2013 (AEO2013) released on Wednesday foresees higher gas production and, with it, a higher share of gas generation by 2040. The outlook also projects a growing share of renewable and nuclear power, but dampened future coal use.
Using a "reference case," which generally assumes that current laws and regulations affecting the energy sector remain unchanged through 2040, the AEO2013 projects that total electricity consumption (including both purchases from electric power producers and on-site generation) will grow at an average annual rate of 0.9%. Total electricity consumption will increase to 4,930 billion kWh in 2040, from 3,841 billion kW in 2011.
Natural Gas Looms over Coal
Coal will remain the dominant source for power generation through 2040, but its share of total generation will fall from 42% in 2011 to 35% in 2040. Expansion of coal-fired capacity is also expected to be restrained by low projected fuel prices for new natural gas–fired plants. The AEO2013 reference case assumes implementation of the Clean Air Interstate Rule, but not the Cross-State Air Pollution Rule (CSAPR), which a federal court vacated in August 2012. Even so, the "lower natural gas prices in the early years of the AEO2013 Reference case result in switching from coal to natural gas–fired generation, more than offsetting any increase in coal-fired generation that might have occurred in the absence of CSAPR," the AEO2013 projects. At the same time, retirements are expected to far outpace new additions so that total coal-fired generating capacity will fall from 318 GW in 2011 to 278 GW in 2040.
Coal production, too, is expected to grow more slowly than previously projected in the EIA’s AEO2012, increasing at an average rate of just 0.2% per year from 22.2 quadrillion Btu (1,096 million short tons) in 2011 to 23.5 quadrillion Btu (1,167 million short tons) in 2040. Significantly, "[f]rom 2011 to 2016, low natural gas prices and the retirement of a sizable amount of coal-fired generating capacity lead to a substantial decline in electricity sector coal consumption, which, in turn, contributes to a 2.0-quadrillion-Btu decline in coal production over those years," the AEO2013 says.
A Natural Gas Boom
Power generation from natural gas is projected to be nearly 10% higher than previously projected in the AEO2012. Low gas prices will boost construction of new natural gas plants, and in 2016—when compliance with the Mercury and Air Toxics Standards (MATS) is expected to be under way and coal-generation hits its lowest point—natural gas generation is expected to soar. From a 16% share of total generation in 2000, natural gas’s share rose to 24% in 2010 and is expected to continue increasing, to 27% in 2020 and 30% in 2040.
From a production standpoint, the AEO2013 foresees continued increases in shale gas production resulting from dual application of horizontal drilling and hydraulic fracturing, which will keep gas prices down. But although natural gas also continues to capture a growing share of total electricity generation, natural gas consumption by power plants does not increase as sharply as generation because "new plants are very efficient," the report says.
As the AEO2012 first projected, the AEO2013 also predicts that the U.S. will become a net exporter of LNG starting in 2016. But the AEO2013 projects that the U.S. will become an overall net exporter of natural gas in 2020—two years earlier than in the AEO2012.
Nuclear Power Sees a Spurt
Between 2011 and 2040, nuclear generation is projected to grow by 14%—from 790 billion kWh in 2011 to 903 billion kWh in 2040. In 2040, nuclear’s share will account for about 17% of total generation, dropping slightly from the 19% share in 2011. New construction is expected to add 5.5 GW, and uprates at existing plants, 8 GW, increasing nuclear capacity from 101 GW in 2011 to about 114 GW in 2025. About 0.6 GW is scheduled to be retired (Dominion’s Kewaunee nuclear plant). After 2025, more retirements (about 7 GW, mostly after 2030) outpace additions, however, resulting in a slight decline in total nuclear capacity to 113 GW by 2040.
Renewables Keep Pace
According to the AEO2013, non-hydro renewables will account for 32% of overall growth in U.S. power generation between 2011 and 2040, surging in response to federal tax credits and state-level policies. Meanwhile, capital costs for new technologies may result in fairly significant cost reductions for wind (13%) and solar PV (22%) compared to AEO2012. The share of U.S. electricity generation coming from renewable fuels (including conventional hydropower) grows from 13% in 2011 to 16% in 2040.
Sources: POWERnews, EIA
—Sonal Patel, Senior Writer (@POWERmagazine)