Natural Gas Projected to Provide Larger Share of Electricity Generation

by | May 6, 2015

Based on its Annual Energy Outlook 2015 Reference case, the Energy Information Administration projects that electricity consumption will increase at an average annual rate of 0.8 percent from 2013 to 2040, nearly in line with expected population growth. Continuing a recent trend toward lower levels of carbon-intensive generation, natural gas and renewable generation meet almost all of the increase.

Electricity generation from renewable sources provided 13 percent of US electricity in 2013. This percentage is projected to increase to 18 percent by 2040.

The natural gas share of total generation is projected to grow, from 27 percent in 2013 to 31 percent in 2040 in EIA’s Reference case, while the coal share declines from 39 percent in 2013 to 34 percent in 2040, and the nuclear share drops from 19 percent to 16 percent over the projection period.

Natural gas-fired generation is highly dependent on natural gas prices as a result of competition with existing coal plants and renewables. The AEO2015 includes several cases with varying fuel prices and economic growth assumptions. In the High Oil and Gas Resource case – where greater oil and natural gas resources lead to delivered natural gas prices to the electric power sector being 44 percent below the Reference case in 2040 – natural gas becomes the leading source of generation by 2020 and accounts for 42 percent of total generation by 2040.

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