Forget renewable energy, natural gas is king until 2040

New study says that 58% of new American power generation over next 25 years will be natural gas, renewables 38%

Seeing lots of “news” on your Facebook feed about the coming solar energy revolution? Don’t believe it. A new forecast from the US Energy Information Administration says that until 2040, most new American power generation will come from natural gas, not renewables.

Source: U.S. Energy Information Administration, Annual Energy Outlook 2015 Reference Case and Annual Electric Generator Report (Form EIA-860) Note: Other includes hydropower, geothermal, biomass, municipal solid waste, and other gaseous fuels used in end-use sectors.

In EIA’s Annual Energy Outlook 2015 Reference case, which reflects current laws and policies and does not include EPA’s proposed Clean Power Plan, natural gas-fired plants account for 58% of the capacity additions through 2040, while renewables provide 38% of the additions, and nuclear 3%.

Total generating capacity (including end-use generators like rooftop solar panels) increases from 1,065 gigawatts (GW) in 2013 to 1,261 GW in 2040. The amount of capacity added is more than three times the amount that is expected to retire, with 287 GW added and 90 GW retired.

Capacity additions through 2017, much of which are under construction, average about 17 GW per year and about half are non-hydro renewable plants (mainly wind and solar) prompted by federal tax incentives and renewable portfolio standards. From 2018 to 2024, projected capacity additions average less than 4 GW per year, as earlier planned additions are sufficient to meet most growth in electricity demand.

From 2025 to 2040, average annual capacity additions—primarily natural gas-fired and renewable technologies—average 12 GW per year. By comparison, annual additions from 2000 to 2013 averaged 26 GW per year.

Source: U.S. Energy Information Administration, Annual Energy Outlook 2015 Reference Case and Annual Electric Generator Report (Form EIA-860) Note: Other includes hydropower, geothermal, biomass, municipal solid waste, and other gaseous fuels used in end-use sectors.

Natural gas-fired combined-cycle plants are relatively inexpensive to build in comparison with new coal, nuclear, or renewable technologies, and are generally more efficient to operate than existing steam plants that may be powered by natural gas, oil, or coal.

Renewable additions are aided in the near term by federal tax credits, and in the longer term by rising natural gas prices and state renewable targets.

The 109 GW of renewable capacity additions in the Reference case are primarily wind (49 GW) and solar (48 GW) technologies, including 31 GW of solar photovoltaic installations from rooftop and other distributed generation installations.

Nuclear additions total 9 GW, including 6 GW of plants currently under construction and 3 GW projected to come online after 2029.

New coal plants total just 1 GW, as high construction costs and uncertainty about future limits on greenhouse gas emissions reduce their competitiveness.

The analysis in the AEO2015 includes several cases that examine different assumptions of macroeconomic growth, world oil prices, and higher oil and natural gas resource availability, which yield a range of projected capacity additions.

Policies such as the proposed Clean Power Plan, or the continuation of tax credits for certain renewable energy technologies that are scheduled to expire under current law can also have a significant effect on projected capacity additions and retirements.