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Annual Energy Outlook 2014

Release Date: May 7, 2014   |  Next Early Release Date: February 2015   |  See schedule  |  full report

Market Trends: Renewable

Solar photovoltaics and wind dominate renewable capacity growth

Total renewable generating capacity grows by 52% from 2012 to 2040 in the AEO2014 Reference case. Nonhydropower renewable capacity, particularly wind and solar, nearly doubles (Figure MT-36) and accounts for almost all of the growth in renewable capacity.


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Solar power leads the growth in renewable capacity, increasing from less than 8 GW in 2012 to more than 48 GW in 2040. Wind capacity increases from less than 60 GW in 2012 to 87 GW in 2040, the second-largest amount of new renewable capacity. Although geothermal capacity more than triples and biomass capacity nearly doubles in the projection, combined they account for less than 15% of renewable capacity additions. Wind is the top source of nonhydropower renewable capacity in the projection, surpassing the hydropower share in 2036.

Renewable capacity growth is supported by a variety of federal and state policies, particularly state renewable portfolio standards (RPS) and federal tax credits. However, the impact of those policies is limited later in the projection period, because individual state renewable targets stop increasing by 2025, and projects must generally be online by 2016 to qualify for currently available federal tax credits. In addition, growth in electricity demand is modest and natural gas prices are relatively low after 2025. Renewable capacity grows by an average of 0.7%/year from 2020 to 2030, compared with 3.8%/year from 2010 to 2020. However, as natural gas prices rise over the projection period, renewable capacity becomes an increasingly cost-competitive option in some regions, and the total grows by an average of 1.5%/year overall from 2030 to 2040.

Total generation from wind, solar, and other renewables surpasses hydropower

Total renewable electricity generation grows by 1.9%/year on average in the Reference case, from 502 billion kWh in 2012 to 851 billion kWh in 2040. Nonhydropower renewables, averaging 3.2%/year growth, account for nearly all of the growth, with their total surpassing hydropower (the previous leader of renewable generation) in 2014 and accounting for about two-thirds of all renewable generation in 2040 (Figure MT-37).


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Solar energy is the fastest-growing source of renewable generation, increasing by 7.5%/year from 2012 to 2040, almost exclusively as a result of increased photovoltaic capacity in both the electric power (central-station) and end-use (customer-sited) sectors. Wind generation grows by an average of 2.0%/year but provides the largest absolute increase in renewable generation. From 2012 to 2016, wind power developers take advantage of the existing federal PTC, which requires plants to be under construction by the end of 2013 to qualify.

Geothermal power is the second-fastest-growing source of renewable electricity generation in the Reference case, increasing from less than 16 billion kWh in 2012 to 67 billion in 2040—a 5.4% average annual growth rate. Biomass generation also grows significantly, increasing by an average of 4.4%/year from 2012 to 2040, primarily as a result of increased use of co-firing technology in the electric power sector in the near- to mid-term. Co-firing is encouraged by state-level policies and increasing regional cost-competitiveness with coal. In the long run, the growth of biomass generation is supported by increased capacity at dedicated biomass plants in the electric power sector, as well as combined heat and power plants in the industrial sector.

California leads renewable electricity generation growth

In the AEO2014 Reference case, nonhydropower renewable generation increases from 2012 to 2040 in all modeled electricity regions (for a map of the regions and definition of acronyms, see Appendix F). Its growth is faster in some regions than in others, and the penetration in the generation mix and resulting increases in generation vary substantially among regions (Figure MT-38).


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Regional growth in nonhydropower renewable generation is mainly driven by three factors: state RPS, availability of renewable energy resources, and cost competiveness with fossil fuel technologies. Factors such as electricity demand growth, non-RPS policies (such as net metering), and electricity prices also
affect the rate of growth, which tends to be strongest in regions where a combination of factors is in place.

The WECC California (CAMX) region accounts for both the highest absolute level of nonhydropower renewable generation in 2040 and the largest growth from 2012 to 2040, which is supported by an aggressive RPS, availability of solar, wind, and geothermal resources, and relatively high electricity prices. The AZNM (Arizona, New Mexico, and Nevada) and SRVC (Virginia, North Carolina, and South Carolina) regions show the next-highest increases in nonhydropower renewable generation from 2012 to 2040. In the AZNM region, growth is supported by mandatory RPS standards, above-average electricity demand growth, and the availability of solar and wind resources. Although Virginia and South Carolina do not have mandatory policies in place, the SRVC region has robust biomass and solar resources and relatively high fossil fuel prices.

Reference Case Tables
Table 1. Total Energy Supply, Disposition, and Price Summary XLS
Table 2. Energy Consumption by Sector and Source - United States XLS
Table 3. Energy Prices by Sector and Source - United States XLS
Table 4. Residential Sector Key Indicators and Consumption XLS
Table 5. Commercial Sector Key Indicators and Consumption XLS
Table 6. Industrial Sector Key Indicators and Consumption XLS
Table 7. Transportation Sector Key Indicators and Delivered Energy Consumption XLS
Table 8. Electricity Supply, Disposition, Prices, and Emissions XLS
Table 9. Electricity Generating Capacity XLS
Table 10. Electricity Trade XLS
Table 11. Petroleum and Other Liquids Supply and Disposition XLS
Table 12. Petroleum and Other Liquids Prices XLS
Table 13. Natural Gas Supply, Disposition, and Prices XLS
Table 14. Oil and Gas Supply XLS
Table 15. Coal Supply, Disposition, and Prices XLS
Table 16. Renewable Energy Generating Capacity and Generation XLS
Table 17. Renewable Energy Consumption by Sector and Source XLS
Table 18. Energy-Related Carbon Dioxide Emissions by Sector and Source - United States XLS
Table 19. Energy-Related Carbon Dioxide Emissions by End Use XLS
Table 20. Macroeconomic Indicators XLS
Table 21. International Petroleum and Other Liquids Supply, Disposition, and Prices XLS