The Energy Information Administration’s Annual Energy Outlook is always chock full of interesting data, and the 2017 version, released uncommonly early last week, is certainly no exception. For its part, EIA highlighted the prospect of the U.S. becoming a net energy exporter in the near future, a far cry from the import-dependent years that drove policymakers crazy in the late 1900s and early 2000s. But from my perspective, the key takeaways can be found in EIA’s analysis of electric sector market shares in a reference case including the outgoing Obama administration’s climate change-fighting Clean Power Plan and a second case assuming the CPP is withdrawn, as the incoming president and his team have said they intend to do.
For starters, regardless of its assumptions, EIA sees no growth going forward for the nuclear power industry. In both its reference case, which incorporates the CPP and should, as a result, favor the construction of non-carbon emitting generation resources, and its no-CPP case, EIA comes up with the same results. Nuclear generation is expected to decline slowly from now through 2040—falling from 797 billion kilowatt-hours in 2016 to 701 billion kwh in 2040 as units are retired (either due to economic or age-related reasons) and no new reactors (save the four currently under construction in Georgia and South Carolina) are brought online. [Charts showing the generation outlook in both cases are included below; the complete EIA Outlook can be found here.]
Continue reading EIA 2017 Outlook
Shows Energy Transition
Will Trump Trump
The bright shiny package the coal industry unwrapped Christmas morning—the one it hoped was filled with rising and lasting demand for the black rock—is actually little more than a pretty box filled with empty promises delivered by the country’s new cheerleader in chief.
Just 10 years ago, coal was the clear top dog, accounting for just under 50 percent of the electricity generated annually in the U.S. (Coal’s total in 2006 was 48.9 percent, the last year it actually topped the 50 percent level was 2003.) This year, coal is likely to play second fiddle to the surging natural gas sector; the Energy Information Administration’s latest Short Term Energy Outlook (released Dec. 8) estimates that coal will account for 30.4 percent of the nation’s electric generation this year, below the 34.1 percent stake controlled by natural gas. And no amount of industry wishful thinking or presidential conceit is going to change that—the markets have changed.
Continue reading New Cheerleader In Chief Can’t Change Coal’s Fall, Rise In Gas, Renewables
So many studies, so little time. Just in the past couple of weeks analyses from DOE’s Energy Information Administration, Bloomberg New Energy Finance, British Petroleum and the International Renewable Energy Agency have hit my inbox (thank goodness we have moved beyond the old hardcopy stage, just those reports alone would have contributed to the world’s ongoing deforestation problem), and having the time to study them all has been difficult. But muddling through them does provide some fascinating glimpses of where the energy industry is today, and where it might be headed in the years to come.
EIA’s 2016 Annual Energy Outlook, released in abbreviated form last month with its full rollout slated for early July, includes more sobering news for electric utility executives: Sales growth really is gone, and it isn’t coming back. In its analysis, EIA estimates that overall electricity sales will grow at an average rate of 0.7 percent from 2015-2040, essentially unchanged from the 0.6 percent growth rate posted from 2000-2015. But a closer look at the numbers shows even that relatively anemic growth estimate may be optimistic.
For example, EIA estimates that electric sales in the residential sector will rise by an average of just 0.3 percent a year from 2015-2040—well under even the paltry 1.1 percent annual growth recorded from 2000-2015. According to EIA, the slow growth can be attributed to rising energy efficiency, especially in the lighting sector, and the broad adoption of distributed photovoltaics (PV). But what is most intriguing about EIA’s estimate is that virtually all of the growth occurs in the out-years (see chart below): From 2015 through 2030 there is essentially zero growth in residential sales. Specifically, EIA puts 2015 sales in the sector at 1,402 billion kilowatt-hours (kwh) and projects that sales in 2030 will rise to just 1,416 billion kwh—an increase, if you can call it that, of 0.1 percent annually. Rather than calling this growth it would be more appropriate to write it off as a rounding error. It also represents the continuation of a longer-term trend: Residential electric sales in 2007, just before the onset of the Great Recession, totaled 1,392 billion kwh. Measured from that starting point, sales are expected to climb just 24 billion kwh in 23 years, a miserly 0.07 percent annual increase.
Continue reading EIA Annual Outlook
Misses The Mark
On Threat To Utilities,
Executives at Akron, Ohio-based FirstEnergy Corp. have perfected the art of talking out of both sides of their mouths: Just look at their approach to competition, which they whole-heartedly support—except when they don’t.
In Maryland, where Republican Gov. Larry Hogan recently vetoed a bill overwhelmingly approved by the state legislature that would have increased the state’s renewable portfolio standard (RPS) from 20 percent in 2022 to 25 percent by 2020, FirstEnergy is all for competition and letting the free market decide. “Competitive markets, not regulatory mandates, provide the most economical solution for renewable generation supply needs in Maryland,’’ the company wrote in March urging state legislators to oppose the new higher standards. Those tighter standards, the company warned, “would result in significant increases in the cost of generation in Maryland.”
Continue reading FirstEnergy Fails the Test
On Utility Competition
With Its Bailout Bid
Republican rhetoric about the Obama administration’s alleged ‘war on coal’ has been heated, and frequently repeated over the past eight years—but it’s wrong. The only war against coal is being waged by market forces, in the form of plentiful and cheap natural gas, low or stagnant electric demand growth, cleaner and ever-cheaper solar and wind, and finally being forced to pay the bill for years of environmental neglect. And the market forces—those same brutally efficient and unemotional market forces that Republicans so cherish in the abstract—are winning.
The Energy Information Administration reported earlier this month that more than 80 percent of the almost 18,000 megawatts of generating capacity retired in 2015 was coal-fired. At first blush (and certainly for the conspiracy-minded) that sounds implausible. But a closer look at the numbers reveals a much different story.
All told, 94 coal-fired units were retired in 2015, and as a group they were much smaller and older than the rest of the coal fleet. Specifically, EIA says the average age of the units retired in 2015 was 54, compared to 38 years for the plants still in operation. Similarly, the retired plants had an average net summer capacity of 133 MW, compared to 278 MW for the remaining coal fleet.
The EIA graphic below does a great job of visualizing the disparity between the two classes of plants.
Continue reading Economics, Not Politics
Is The Real Problem
For U.S. Coal-Fired Fleet