‹ Analysis & Projections

Annual Energy Outlook 2011

Release Date: April 26, 2011   |  Next Early Release Date: January 23, 2012  |   Report Number: DOE/EIA-0383(2011)

Renewable

Biomass and wind lead growth in renewable generation

Renewable electricity generation, excluding hydropower, accounts for nearly one-quarter of the growth in electricity generation from 2009 to 2035 in the AEO2011 Reference case (Figure 83). The increase is supported by RFS, State-level renewable electricity standards, and Federal tax credits. In the Reference case, generation from wind power nearly doubles its share of total generation, while generation from geothermal resources triples as a result of technology advances that make previously marginal sites attractive for development, as well as increasing the resources available at existing geothermal sites.


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Renewable electricity generation in the end-use sectors also continues to grow. As a result of the Federal RFS that requires increased use of biofuels, there is an attractive opportunity to use waste heat from biofuel production to generate electricity. Consequently, generation from biomass more than triples from 2009 to 2035, when it accounts for 39 percent of total nonhydroelectric renewable electricity generation. Generation from solar resources increases from 2 percent of nonhydroelectric renewable generation in 2009 to more than 5 percent in 2035, as capital costs, especially for PV technologies in the end-use sectors, decrease over time. End-use solar generation grows from 2.3 billion kilowatthours in 2009 to 16.8 billion kilowatthours in 2035, and additional growth in solar generation comes from utility-scale PV plants, which begin to become competitive in the later years of the projection.

Renewable capacity growth spurred by end-use increases

Supported in part by Federal tax credits in the early part of the projection period, the Federal renewable fuels standard, and State renewable portfolio standards, nonhydropower renewable generating capacity grows at a faster rate than fossil fuel capacity in the AEO2011 Reference case. Total nonhydropower renewable capacity increases from 47 gigawatts in 2009 to 100 gigawatts in 2035 (Figure 84). The largest increase is in wind-powered generating capacity. Because the Federal PTC expires at the end of 2012, however, 73 percent of the overall increase in wind capacity (18.2 gigawatts) occurs between 2009 and 2012. From 2012 through 2035, only an additional 6.9 gigawatts of wind capacity is added.


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Biomass generating capacity grows from 7 gigawatts in 2009 (15 percent of total nonhydropower renewable capacity) to 20.2 gigawatts in 2035 (20 percent). All the growth in biomass capacity occurs in the end-use sectors, mainly at biorefineries, where electricity generation capacity increases as a result of mandates in the Federal RFS that require increased use of biofuels. No growth occurs in dedicated biomass generating capacity, because dedicated open-loop biomass plants remain too expensive to compete successfully with renewable capacity.

Solar generating capacity increases five-fold, with most capacity additions coming in the end-use sectors. The additions are based on a decline in the cost of photovoltaic systems over the projection period and the availability of Federal tax credits through 2016. Geothermal capacity also grows as a result of increased site availability, more favorable resource estimates, and lower costs for construction of geothermal facilities.

State portfolio standards increase renewable electricity generation

Regional growth in renewable generation is based largely on two factors: availability of renewable energy resources and the existence of State RPS programs. After a period of robust RPS enactments in several States, 2010 was a relatively quiet year for RPS expansions. The most prominent change was California's RPS modification, which now requires renewable energy (including hydroelectric plants smaller than 30 megawatts capacity) to make up 33 percent of electricity generation, strengthening the prior 20-percent requirement that was supported by a limited fund.

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The WECC California region (CAMX), whose area approximates the California State boundaries (for a map of the electricity regions modeled, see Appendix F) has the largest projected nonhydroelectric renewable capacity, at 13.8 gigawatts in 2035 (Figure 85). The vast majority of California's renewable generating plants in 2035 consist of wind and geothermal capacity, each totaling more than 4.5 gigawatts in 2035. The Texas Regional Entity (ERCT) has more wind capacity in 2035 than any other region, at 10.1 gigawatts in 2035, and the second-largest nonhydro renewable capacity overall.

CAMX leads in solar installations, although State RPS programs heavily influence solar growth beyond the Southwest as both the Reliability First Corporation/East (RFCE) and the Reliability First Corporation/West (RFCW) regions have about 1 gigawatt of end-use solar capacity in 2035. Those two regions are not known for a strong solar resource base, and the installations are in response to the ITC in the early years of the projection period and high electricity prices during the later years. Most biomass capacity—confined largely to the end-use sectors—is built at cellulosic ethanol plant sites, most of which are in the Southeast.

Renewable sources lead rise in primary energy consumption

Consumption of all fuels increases in the AEO2011 Reference case, but the aggregate fossil fuel share of total energy use falls from 83 percent in 2009 to 78 percent in 2035 as renewable fuel use grows rapidly (Figure 57). The renewable share of total energy use increases from 8 percent in 2009 to 13 percent in 2035, in response to the Energy Independence and Security Act of 2007 (EISA2007) RFS, availability of Federal tax credits for renewable electricity generation and capacity early in the projection period, and State renewable portfolio standard (RPS) programs.

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Consumption of all liquid fuels increases by 0.5 percent per year from 2009 to 2035, with most of the increase accounted for by biofuels. The petroleum share of liquid fuel use declines as consumption of alternative fuels increases and petroleum use is roughly flat. Nearly all use of liquid biofuels occurs in the transportation sector. Biodiesel blended into diesel, motor fuel containing up to 85 percent ethanol (E85) fuel, and ethanol blended into motor gasoline account for 54 percent of the growth in liquids fuel consumption from 2009 to 2035.

Natural gas consumption grows by about 0.6 percent per year from 2009 to 2035, as the large amount of shale gas resources that can be produced at prices under $7 per thousand cubic feet keeps natural gas prices from 2009 through 2035 below the levels seen from 2005 to 2008.

Coal consumption increases by 0.8 percent per year in the Reference case from 2009 to 2035, or by 0.2 percent per year starting from the 2007 consumption level. Several coal-fired power plants currently under construction, with combined capacity totaling 11.5 gigawatts, come on line by 2012. Nuclear power capacity expands by 9.5 gigawatts, but the nuclear share of primary energy falls from 8.8 percent in 2009 to 8.0 percent in 2035.

Unconventional vehicle technologies exceed 40 percent of new sales in 2035

Unconventional vehicles (those that use diesel, alternative fuels, and/or hybrid electric systems) play a significant role in meeting more stringent fuel economy standards and offering fuel savings in the face of relatively higher fuel prices, growing from 15 percent of new vehicle sales in 2009 to 42 percent by 2035 in the AEO2011 Reference case.

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Flex-fuel vehicles (FFVs), which can use blends of ethanol up to 85 percent, represent the largest share of unconventional LDV sales in 2035, at 19 percent of total new vehicle sales and 47 percent of unconventional vehicle sales (Figure 75). Manufacturers selling FFVs currently receive incentives in the form of fuel economy credits earned for CAFE compliance through MY 2016. FFVs also play a critical role in meeting the RFS for biofuels.

Sales of electric and hybrid vehicles that use stored electric energy grow considerably in the Reference case. Micro hybrids, which use start/stop technology to manage engine operation while at idle, account for 8 percent of all conventional gasoline vehicle sales by 2035, the largest share for vehicles that use electric storage. Gasoline-electric and diesel-electric hybrid vehicles account for 5 percent of total LDV sales and 13 percent of unconventional vehicle sales in 2035, and plug-in and all-electric hybrid vehicles account for 3 percent of LDV sales and 8 percent of unconventional vehicle sales. Sales of diesel vehicles also increase, to 5 percent of total LDV sales and 13 percent of unconventional vehicle sales in 2035. Light duty natural gas vehicles account for less than 0.1 percent of new vehicle sales throughout the projection due to their high incremental cost and limited fuel infrastructure.

Biofuels and natural gas liquids lead growth in total liquids supply

With world oil prices rising in the AEO2011 Reference case, domestic liquids production grows (Figure 94). From 2009 to 2035, U.S. crude oil production increases by about 600,000 barrels per day.


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As a result of the EISA2007 RFS, biofuels production increases by almost 1.5 million barrel per day, with ethanol accounting for the largest share of the increase. Ethanol production increases by more than 800,000 barrels per day from 2009 to 2035, displacing approximately 12 percent of gasoline demand in 2035 on an energy-equivalent basis. In the early years of the projection, ethanol is blended with gasoline and consumed as E10, motor gasoline blends containing up to 10 percent ethanol, or E15, moror gasoline blends containing up to 15 percent ethanol. By 2035, however, ethanol is consumed in roughly equal shares as E10, E15, and E85.

NGL production increases by 1.0 million barrels per day, to 2.9 million barrels per day in 2035, mainly as a result of strong growth in gas shale production, which tends to have relatively large amounts of liquids associated with it. BTL production increases to 516,000 barrels per day, and CTL production increases to 550,000 barrels per day in 2035.

Much of the increased liquids production comes from oil in shale formations (i.e., produced from kerogen, a solid hydrocarbon), CO2-enhanced oil recovery (EOR), and next-generation "xTL" production, which includes biomass-to-liquids (BTL), GTL, and CTL.

Higher limit on ethanol blending spurs consumption growth in the near term

Currently, given the limited retail availability of E85, the primary use of ethanol in the United States is as a blendstock for gasoline. With rapid growth in ethanol capacity and production in recent years, ethanol consumption in 2010 approached the legal gasoline blending limit of 10 percent (E10). Recent EPA actions have increased the blending limit to 15 percent (E15) for vehicles built in 2001 and after. Although the higher blending limit allows ethanol consumption to increase in the near term, a number of issues may constrain its immediate impact.

One of the primary issues expected to slow the widespread adoption of E15 is liability for potential misfueling and infrastructure problems. Retailers will be hesitant to sell E15 if they are not relieved of responsibility for damage to consumer vehicles that may result from misfueling, as well as malfunctions of storage equipment or infrastructure that may be caused by the higher ethanol blend. Consumer acceptance will also play a part; warning labels could deter customers from risking any potential damage from the use of E15.


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Given the issues above, ethanol blending in gasoline increases only gradually in the AEO2011 Reference case (Figure 100), from 13.1 billion gallons in 2010 (about 9 percent of the gasoline pool) to 17.8 billion gallons in 2020 (about 12 percent of the gasoline pool). In 2020, vehicles built in 2001 and after consume E15 primarily, and the remaining growth in ethanol consumption shifts to E85 use, which increases from about 0.8 billion gallons in 2017 to 9.6 billion gallons in 2035.

Reference Case Tables
Table 1. Total Energy Supply, Disposition, and Price Summary XLS
Table 16. Renewable Energy Generating Capacity and Generation XLS
Table 17. Renewable Energy Consumption by Sector and Source XLS
Table 18. Carbon Dioxide Emissions by Sector and Source - United States XLS
Table 18.1. Carbon Dioxide Emissions by Sector and Source - New England XLS
Table 18.2. Carbon Dioxide Emissions by Sector and Source - Middle Atlantic XLS
Table 18.3. Carbon Dioxide Emissions by Sector and Source - East North Central XLS
Table 18.4. Carbon Dioxide Emissions by Sector and Source - West North Central XLS
Table 18.5. Carbon Dioxide Emissions by Sector and Source - South Atlantic XLS
Table 18.6. Carbon Dioxide Emissions by Sector and Source - East South Central XLS
Table 18.7. Carbon Dioxide Emissions by Sector and Source - West South Central XLS
Table 18.8. Carbon Dioxide Emissions by Sector and Source - Mountain XLS
Table 18.9. Carbon Dioxide Emissions by Sector and Source - Pacific XLS
Table 58. Renewable Energy Generation by Fuel - United States XLS
Table 58.1. Renewable Energy Generation by Fuel - Texas Regional Entity XLS
Table 58.1. Renewable Energy Generation by Fuel - Reliability First Corporation / Michigan XLS
Table 58.11. Renewable Energy Generation by Fuel - Reliability First Corporation / West XLS
Table 58.12. Renewable Energy Generation by Fuel - SERC Reliability Corporation / Delta XLS
Table 58.13. Renewable Energy Generation by Fuel - SERC Reliability Corporation / Gateway XLS
Table 58.14. Renewable Energy Generation by Fuel - SERC Reliability Corporation / Southeastern XLS
Table 58.15. Renewable Energy Generation by Fuel - SERC Reliability Corporation / Central XLS
Table 58.16. Renewable Energy Generation by Fuel - SERC Reliability Corporation / Virginia-Carolina XLS
Table 58.17. Renewable Energy Generation by Fuel - Southwest Power Pool / North XLS
Table 58.18. Renewable Energy Generation by Fuel - Southwest Power Pool / South XLS
Table 58.19. Renewable Energy Generation by Fuel - Western Electricity Coordinating Council / Southwest XLS
Table 58.2. Renewable Energy Generation by Fuel - Western Electricity Coordinating Council / California XLS
Table 58.2. Renewable Energy Generation by Fuel - Florida Reliability Coordinating Council XLS
Table 58.21. Renewable Energy Generation by Fuel - Western Electricity Coordinating Council / Northwest Power Pool Area XLS
Table 58.22. Renewable Energy Generation by Fuel - Western Electricity Coordinating Council / Rockies XLS
Table 58.3. Renewable Energy Generation by Fuel - Midwest Reliability Council / East XLS
Table 58.4. Renewable Energy Generation by Fuel - Midwest Reliability Council / West XLS
Table 58.5. Renewable Energy Generation by Fuel - Northeast Power Coordinating Council / Northeast XLS
Table 58.6. Renewable Energy Generation by Fuel - Northeast Power Coordinating Council / NYC-Westchester XLS
Table 58.7. Renewable Energy Generation by Fuel - Northeast Power Coordinating Council / Long Island XLS
Table 58.8. Renewable Energy Generation by Fuel - Northeast Power Coordinating Council / Upstate New York XLS
Table 58.9. Renewable Energy Generation by Fuel - Reliability First Corporation / East XLS