The U.S. Energy Information Administration's newly released Annual Energy Outlook 2019 report projects natural gas and renewables will generate approximately 70% of the United States' electricity by 2050 due to low natural gas prices and declining capital costs for renewables. Natural gas and renewables during 2018 generated about 52% of the country's electricity.
"The effect of abundant, generally low-priced natural gas is really evident in the power sector," EIA Administrator Linda Capuano on Jan. 24 said in releasing the agency's annual outlook at the Bipartisan Policy Center in Washington, D.C.
The report's baseline projections, or reference case, assumes no major changes in current laws, regulations, market trends and technology, and a 1.9% average annual growth in real gross domestic product. It further assumes that natural gas prices will remain below $4 per million British thermal units through 2035 and $5 per million Btu thereafter through 2050. As a result, the outlook has natural gas' share of the U.S. generation mix growing from 34% in 2018 to 39% in 2050. It also projects renewables overtaking nuclear in terms of power production in 2020, the same year the U.S. is on target to become a net energy exporter thanks to substantial domestic production of oil, natural gas and liquefied natural gas.
Renewables' share, including hydropower, of U.S. power production is projected to increase from 18% in 2018 to 31% in 2050, driven largely by growth in wind and solar generation. In contrast, EIA expects the share of U.S. power production by nuclear energy is expected to fall from 19% in 2018 to 12% in 2050, and coal-fired generation's share to drop from 28% in 2018 to 17% by 2050.
"Initially supported by various tax incentives that are phased out through the '20s, renewable generation continues to grow as capital costs continue to decline and this is important," emphasized Capuano. "As the incentives roll away, there is [still] cost advantages" for renewables. In total, EIA expects 72 GW of combined new wind and solar photovoltaic capacity will be installed between 2018 and 2021, before the expiration of tax credits.
"By 2020, renewable generation surpasses nuclear across all [studied] cases," said Capuano, who added most nuclear plant retirements (and coal plant retirements) will occur by 2025. EIA's reference case foresees no new nuclear power plant additions other than the Alvin W. Vogtle Nuclear Plant's expansion, and America's total nuclear capacity to stabilize at around 80 GW through 2050 after falling from 99 GW in 2018. If natural gas, oil prices, and extraction costs continue to fall, however, EIA said additional nuclear retirements could continue until the fleet stabilizes at just under 60 GW after 2030.
The EIA outlook said increasing energy efficiency across end-use sectors will also keep U.S. energy consumption relatively flat, even as the U.S. economy continues to expand. However, Capuano said electricity prices will only decline by 1% annually, or between 9.7 to 11.6 cents/kilowatt-hour by 2050, as a 16% decline in generation costs, caused by the replacement of older, less efficient capacity, is offset by increases in transmission and distribution costs of 18% and 25%, respectively. The replacement of aging infrastructure and needed additions of new capacity to accommodate the integration of intermittent renewables onto the power grid will be blamed for those transmission and distribution costs, Capuano predicted.
Regarding efforts to combat climate change, the EIA outlook forecast that with no changes to current policy power sector-related carbon dioxide emissions will only fall by 0.3% from 1,741 million metric tons of CO2 in 2018 to 1,587 million MTCO2 by 2050.
During a panel discussion following the report's release, former Federal Energy Regulatory Commission member Colette Honorable said the outlook pulled no surprises but confirmed her thinking on a number of issues, including the importance of fuel and resource diversity and the need for natural gas resources in accommodating the slated "onslaught" of intermittent renewables.
Looking forward, Honorable stressed the need for a "proper amount" of regulation to give investors' certainty in public policy and foster a positive "symbiotic relationship" between the market and public policy that favors technological innovation.
"Take energy storage for example," Honorable said. "I can't say that policy development and regulation caused prices to go down significantly but I can say without hesitation that policy development and the proper amount of regulation in wholesale markets have removed barriers for the integration of energy storage resources in wholesale markets."
Honorable said the difficulty for utility regulators and the energy industry will be aligning market needs with state public policies, such as Illinois' zero-emissions credits that compensate at-risk nuclear plants for avoided emissions, without colliding with FERC's role in maintaining competitive wholesale power markets.
Despite expressing opposition to regulators striving to "save coal and nuclear," Honorable said she applauds states for taking a "chance" on nuclear by valuing that technology's various attributes, including reliability, resilience, and sustainability. "For those states that are working with what [energy resources] they have to meet their [climate and other public policy] goals, I applaud them and we should support them," she said.