EIA’s energy outlook shows effect of fuel prices, regulations
The generation mix of the future will be determined by fuel costs and energy policies, the U.S. Energy Information Administration’s (EIA) Annual Energy Outlook 2017 (AEO2017) showed.
The Clean Power Plan, an Environmental Protection Agency rule issued in 2015, creates incentive to move away from carbon-intensive energy sources and toward sources that emit less carbon.
In a scenario without the Clean Power Plan, coal regained its position as the leading power source by 2019 and retained the top position until 2032, when it was surpassed by natural gas. Fewer coal plants were retired, and so less natural gas and renewable capacity was added. Renewable generation remained below coal until 2040.
In a scenario with the Clean Power Plan, coal production continues to decline while natural gas and renewable generation grows. Nuclear generation declines slightly.
Natural gas prices are another significant factor. If prices remain near their current level due to lower extraction costs and higher resource availability, natural gas production grows and less renewable capacity is added and more coal plants retire or convert to natural gas.
Higher natural gas prices due to higher extractions and less resource availability lead to more generation from renewables and coal. Coal-fired generation remains above power from natural gas through 2040. With the Clean Power Plan in place in this scenario, more zero-carbon generation is needed to meet requirements. As a result, renewables surpass natural gas in 2022 and coal in 2028.
This situation is also the only one in AEO2017 that results in added nuclear capacity beyond what is currently under construction.
