EIA Energy Outlook sees continued expansion of natural gas, renewables

The United States is becoming a net energy exporter, the Energy Information Administration (EIA) said Jan. 5 with the release of its Annual Energy Outlook for 2017.

The nation is expected to become a net energy exporter by 2026 although this could happen quicker under some of the alternative scenarios explored by the annual EIA report.

It should be noted that the “reference case” used by EIA assumes that the Environmental Protection Agency (EPA) Clean Power Plan, designed to cut power sector carbon dioxide (CO2) emissions, will be upheld by the courts.

The Clean Power Plan is awaiting a ruling by the U.S. Court of Appeals for the D.C. Circuit and could ultimately be appealed to the U.S. Supreme Court.

The reference call also factors in the impact of key state laws. For example, California state law SB-32, which was passed in 2016, requires statewide greenhouse gas emissions to be 40% below the 1990 level by 2030.

Growth in electricity demand, while relatively low historically, begins to rise slowly across the projection period as demand for electric services is only partially offset by regulatory compliance and efficiency gains in electricity-using equipment.

International natural gas trade, which has historically been mostly shipments by pipeline from Canada and to Mexico, is projected to be increasingly dominated by liquefied natural gas exports to more distant destinations, EIA said in the report.

The United States is expected to continue as a net exporter of coal, but its export growth is not expected to increase significantly because of competition from other global suppliers closer to major markets.

The reference case, which assumes status quo on known laws and regulations and other factors, envisions total energy consumption increases by 5% between 2016 and 2040.

In all Annual Energy Outlook (AEO) cases, the electric power sector remains the largest consumer of primary energy, according to EIA.

70 GW of new wind and solar power could be added by 2021

The reference case also assumes that coal consumption decreases as coal loses market share to natural gas and renewable generation in the electric power sector.

In the Reference case, nearly 70 GW of new wind and solar photovoltaic (PV) capacity is added over 2017–2021, encouraged by declining capital costs and the availability of tax credits.

Nuclear generation declines modestly over 2017–2040 in the Reference case as new builds already being developed and plant uprates nearly offset retirements. The decline in nuclear generation accelerates beyond 2040 as a significant share of existing plants is assumed to be retired at age 60.

On a percentage basis, renewable energy grows the fastest because capital costs fall with increased penetration and because current state and federal policies encourage its use.

Unlike energy consumption, which varies less across AEO2017 cases, projections of energy production vary widely.

Total energy production increases by more than 20% from 2016 through 2040 in the reference case, led by increases in renewables, natural gas, and crude oil production.

The Annual Energy Outlook provides modeled projections of domestic energy markets through 2050, and includes cases with different assumptions of macroeconomic growth, world oil prices, technological progress, and energy policies.

The EIA authors note that the “projections” in the report are “not predictions of what will happen, but rather modeled projections of what may happen given certain assumptions and methodologies.”

The report also includes the disclaimer that energy market projections are subject to much uncertainty, as many of the events that shape energy markets and future developments in technologies, demographics, and resources cannot be foreseen with certainty.

AEO is published pursuant to the Department of Energy (DOE) Organization Act of 1977, which requires the EIA administrator to prepare annual reports on trends and projections for energy use and supply.

Much of the report centers around the EIA “reference case” that assumes trend improvement in known technologies, along with a view of economic and demographic trends reflecting the current central views of leading economic forecasters and demographers.

The reference case generally assumes that current laws are regulations affecting energy are unchanged. The potential impact of proposed legislation and regulations are not reflected in the reference case.

There are also “side cases” that assume things like dramatic changes in world oil prices or assumptions that the EPA Clean Power Plan is not implemented.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.