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.
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.
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).
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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