Coal-fired power generation from existing plants will
increase through 2025, this according to the Annual Energy
Outlook 2015 (AEO2015) report published by the U.S. Energy
Information Administration (EIA) this week.
The report centers its expectations on a middle-of-the-road
predictive model called the “AEO2015 Reference case”, but
also compares this reference case to alternative predictive
models which adjust for variables including: low and high
oil prices, low and high economic growth, and high oil and
gas resources.
The report predicts tradeoffs between fuels used for
electricity generation, primarily due to slow growth in
demand, combined with rising natural gas prices,
environmental regulations, and the continued growth of
renewable generation.
Coal and nuclear
Generation from existing coal-fired and new nuclear plants
is predicted to increase through 2025, even as natural
gas-fired generation remains below its 2012 levels.
In the longer term, generation from coal and nuclear energy
will remain fairly flat as high utilization rates at
existing units, and high capital costs and long lead times
for new units mitigate growth in the coal-fired and nuclear
sectors.
Coal-fired capacity is predicted to decline from 304 GW
(2013) to 260 GW (2040), this as a result of retirements and
very few new additions. Coal’s share of total electricity
generation is predicted to drop from 39 percent (2013) to 34
percent (2040), but will still account for the largest share
of total generation.
High construction costs for nuclear plants are predicted to
limit nuclear’s competitiveness in meeting new demand. From
2013 to 2040, the nuclear share of total generation is
expected to decline across all AEO2015 predictive models.
Natural Gas
Beyond 2025, natural gas will fuel more than 60 percent of
new generation, with growth in renewables supplying most of
the remaining need.
The outlook for natural gas’ share of total generation
varies by AEO2015 case, depending on fuel prices. Its growth
is supported by limited potential to increase coal use at
existing coal-fired generating units, which in some regions
are already at maximum utilization rates.
Total natural gas-fired generation is expected to grow by 40
percent from 2013 to 2040. In that time, its share of total
generation will grow from 27 to 31 percent, with most of the
growth occurring in the second half of the projection
period.
Future natural gas prices will be influenced by a number of
factors including oil prices, resource availability, and
demand for natural gas. The Henry Hub natural gas spot price
is expected to rise from $3.69 per million Btu (2015) to
$4.88 per million Btu (2020) and to $7.85 per million Btu
(2040) as increased demand in domestic and international
markets leads to the production of increasingly expensive
resources.
Renewables
Renewable generation is predicted to grow substantially from
2013 to 2040 in all AEO2015 cases, with increases ranging
from less than 50 percent in the High Oil and Gas Resource
and Low Economic Growth cases, to 121 percent in the High
Economic Growth case. The largest growth is predicted for
the wind and solar sectors.
The increased use of renewables is favored by long-term
increases in natural gas prices, the high capital costs of
new coal and nuclear generation capacity, state-level
policies, and cost reductions for renewable generation in a
market characterized by relatively slow electricity demand
growth.
By 2040, non-hydropower renewable energy sources will
account for more than two-thirds of total renewable
generation. Renewable energy’s total share of all
electricity generation will increase from 13 percent (2013)
to 18 percent (2040).
Emissions
Improved efficiency in end-use sectors and a shift away from
more carbon-intensive fuels will help stabilize U.S.
energy-related carbon dioxide (CO2) emissions, which are
expected to remain below the 2005 level through 2040.
CO2 emissions from the electric power industry are predicted
to increase by an average of 0.2 percent per year from 2013
to 2040 due to relatively slow growth in electricity sales
and the increasing replacement of coal with lower-carbon
fuels like natural gas and renewable energy sources.
The AEO2015 cases do not factor for the proposed
Clean Power Plan.
Total electricity use and consumer costs
Total electricity use, including both purchases from
electric power producers and on-site generation, is
predicted to grow by an average of 0.8 percent per year,
increasing from 3,836 billion kWh (2013) to 4,797 billion
kWh (2014).
An 18 percent increase in the average retail price of
electricity is predicted by 2040, due mostly to slow growth
in demand, combined with the rising costs for power
generation, transmission, and distribution.
EIA’s full report can be viewed
here.
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