EIA: Natural gas overtakes coal, but for how long?
Has gas supplanted coal permanently? Not so fast, according to the federal government’s top energy analysts.
Natural gas-fired electricity generation overtook coal as the primary source for several months in the past year. Has gas supplanted coal permanently? Not so fast, according to the federal government’s top energy analysts.
Regulatory policy, renewable tax credits and low gas prices continue to drive down coal’s share of the generation mix, according to the U.S. Energy Information Administration’s Annual Energy Outlook 2017 released Thursday.
However, the EIA predicts coal will regain its larger share over natural gas—as gas prices rebound from 20-year lows in 2016—and hold it through 2020.
The shift toward renewables, driven by declining capital costs and sustained tax credits, will add nearly 70 GW of new wind and solar photovoltaic capacity from 2017 to 2021, according to the EIA outlook.
After 2030, new generation capacity additions will be split primarily between solar and natural gas, with solar accounting for more than half of that new capacity through 2040, the report says.
Electricity demand across all sectors will increase, although at dramatically lower rates than in the past. Residential demand is projected to rise from barely over 1 trillion kWh last year to 1.6 trillion kWh annually by 2040. Commercial and industrial demand should increase to nearly 1.6 trillion and 1.4 trillion kWh, respectively, the EIA report shows.
Nuclear power has a harder road going forward. The EIA anticipates no new, unannounced nuclear capacity added during the projection period due to low natural gas prices, higher renewables penetration, low load growth and relatively high capital costs.
All in all, the outlook projects that nuclear electricity generating capacity will fall from approximately 100 GW in 2016 to 90 GW in the next quarter century. The reduction occurs because of 6.4 GW in total announced retirements and another 3 GW in projected retirements in 2019 and 2020.
If the Clean Power Plan (CPP) survives its court challenge (and the Trump Administration) its impacts will cut deeper into coal’s place in the generation mix. Yet the EIA projects a near-term growth in coal production, to more than 800 million short tons annually through 2020 as a result of rising natural gas prices.
Twenty years later in a pro-CPP world, coal production will decline to nearly 620 million short tons annually in 2040. If the CPP is scrapped and loses its legal fight, coal production will rise above 850 million short tons per year, according to the EIA.
Click here to see more of the EIA’s Annual Energy Outlook 2017.