Renewables set to overtake gas in US power mix

The US Energy Information Administration (EIA) has updated its projections of future US energy production and use in its latest Annual Energy Outlook (AEO2020). Among its key findings, the report suggests that renewables are set to overtake gas in the US power mix to 2050. Renewables are forecast to account for 38% of electricity in 2050 (up from 19% today), while natural gas will see its share drop slightly to 36% (from 37% today).

The report’s Reference Case, which serves as a baseline modelled projection designed to explore varying assumptions about the economy, technology and policy, examines a future where slower growth in consumption in an increasingly energy efficient US economy contrasts with increasing energy supply because of technological progress in renewable sources, oil, and natural gas.

The key findings under the Reference Case include:

• US energy consumption will grow more slowly (0.35%/y on average) than gross domestic product (GDP, at 1.9%/y) throughout the projection period to 2050 as US energy efficiency continues to increase. This decline in the energy intensity of the US economy is predicted to continue through 2050.
• The electricity generation mix will continue to experience a rapid rate of change, with renewables the fastest-growing source of electricity generation through 2050 due to continuing declines in the capital costs for solar and wind that are supported by federal tax credits and higher state-level renewables targets. Solar contributes the most to the growth, more than tripling from 14% of total renewable generation in 2019 to 46% by 2050. With slow load growth and increasing electricity production from renewables, US coal-fired and nuclear electricity generation is expected to decline through the mid-2020s as a result of capacity retirements. However, their generation is expected to stabilise over the longer term as the more economically viable plants remain in service.
• The US will continue to produce historically high levels of crude oil and natural gas under the Reference Case, supported by the continued development of tight oil and shale gas resources. US crude oil production is expected to remain near 14mn b/d through the mid-2040s, while natural gas production is predicted to reach 45tn cf by 2050. With production growth outpacing domestic consumption, exports of crude oil, petroleum products and LNG are expected to increase.
• After falling during the first half of the projection period as a result of retirements of coal-fired generation capacity and corresponding changes in the mix of fuels used for power generation, total US energy-related CO₂ emissions are expected to resume modest growth in the 2030s, driven largely by increases in energy demand from the transport and industrial sectors. However, by 2050, they will remain 4% lower than 2019 levels.

In addition to the AEO2020 baseline Reference Case, the EIA uses eight side cases to explore various uncertainties. New in the report are two cases (High Renewables Cost and Low Renewables Cost) that explore the implications of varying the assumed future costs of renewable power generation technologies.

Commenting on the report, EIA Administrator Linda Capuano says: ‘We see renewables as the fastest-growing source of electricity generation [in the US] through 2050 as cost declines make them economically competitive beyond the expiration of existing federal and state policy supports.’ She adds: ‘With continued technologically enabled growth in domestic oil and natural gas production, we see the US remaining a net exporter of energy for some time.’ According to the EIA, the US became a net exporter of energy on a monthly basis in September 2019 after decades of being a net importer.