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Electricity explained Electricity generation, capacity, and sales in the United States

Three terms are important to understand when learning about electricity production and consumption:

  • Generation is a measure of electricity produced over time. Most electric power plants use some of the electricity they produce to operate the power plant.
  • Capacity is the maximum level of electric power (electricity) that a power plant can supply at a specific point in time under certain conditions.
  • Sales are the amount of electricity sold to customers over a period of time, and they account for most of U.S. electricity consumption.

More electricity is generated than sold, because some energy is lost (as heat) in transmission and distribution of electricity. In addition, some electricity consumers generate electricity and use most or all of it, and the amount they use is called direct use. These consumers include industrial, manufacturing, commercial, and institutional facilities, as well as homeowners who have their own electricity generators. The United States also exports and imports some electricity to and from Canada and Mexico. Total U.S. electricity consumption by end-use consumers is equal to U.S. retail sales of electricity plus direct use of electricity.

The U.S. Energy Information Administration (EIA) publishes data on two general types of electricity generation and electricity generating capacity:

  • Utility scale includes electricity generation and capacity of generating units (generators) located at power plants with at least one megawatt (MW) of total electricity generating capacity.
  • Small scale includes generators with less than 1 MW of generating capacity that are usually at or near where the electricity is consumed. The most common type of small-scale systems are solar photovoltaic systems installed on building rooftops.

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A standard unit for measuring electricity is the kilowatt (kW), which is equal to 1,000 Watts. A Watt is a measure of energy named after the Scottish engineer James Watt. One kW of electricity generated or used over the course of one hour is a kilowatthour (kWh). Other units for measuring electricity capacity and electricity generation and consumption are

  • Megawatt (MW) = 1,000 kW; megawatthour (MWh) = 1,000 kWh
  • Gigawatt (GW) = 1,000 MW; gigawatthour (GWH) = 1,000 MWh
Sources of U.S. electricity generation, 2017: Renewables 17%, Petroleum 1%, nuclear 20%, coal 30%, natural gas 32%

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Electricity generation

In 2018, net generation of electricity from utility-scale generators in the United States was about 4.2 trillion kilowatthours (kWh). EIA estimates that an additional 30 billion kWh (or 0.03 trillion kWh) were from small-scale solar photovoltaic (PV) systems, most of which was direct use. Total direct use of net electricity generation in 2018 was about 144 billion kWh.

In 2018, about 63% of U.S. utility-scale electricity generation was produced from fossil fuels (coal, natural gas, and petroleum), about 19% was from nuclear energy, and about 17% was from renewable energy sources.

  • The shares of utility-scale electricity generation by major energy sources in 2018 were
  • natural gas35%
  • coal27%
  • nuclear19%
    • renewables (total)17%
    • nonhydroelectric renewables10%
    • hydroelectric7%
  • petroleum and other1%

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Electricity generating capacity

To ensure a steady supply of electricity to consumers, operators of the electric power system, or grid, call on electric power plants to produce and place the right amount of electricity on the grid at every moment to instantaneously meet and balance electricity demand.

In general, power plants do not generate electricity at their full capacities at every hour of the day. Three major types of generating units vary by intended usage:

  • Base load generating units normally supply all or part of the minimum, or base, demand (load) on the grid. A base load generating unit runs continuously, producing electricity at a nearly constant rate throughout most of the day. Base load generating units generally have the largest capacity of the three types of units.
  • Peak load generating units help to meet electricity demand when it is at its highest, or peak, such as when electricity use for air conditioning increases during hot weather.
  • Intermediate load generating units operate during the transition between base load and peak load requirements.

Generators powered by wind and solar energy supply electricity only when these resources are available (i.e., when it's windy or sunny). When these renewable generators are operating, they may reduce the amount of electricity required from other generators to supply the grid.

Distributed generators are connected to the electricity grid, but they primarily supply some or all of the electricity demand of individual buildings or facilities. Sometimes, these systems may generate more electricity than the facility consumes, in which case the surplus electricity is sent to the grid. Most small-scale solar photovoltaic systems are distributed generators.

At the end of 2018, the United States had about 1,097,859 MW—or 1.1 billion kilowatts (kW)—of total utility-scale electricity generating capacity and about 20 million kW of small-scale distributed solar photovoltaic electricity generating capacity.

Generating units fueled primarily with natural gas account for the largest share of utility-scale electricity generating capacity in the United States.

  • The shares of utility-scale electricity generating capacity by primary energy source in 2018 were
  • natural gas43%
  • coal22%
    • renewables (total)22%
    • nonhydroelectric13%
    • hydroelectric9%
  • nuclear9%
  • petroleum3%
  • other sources0.5%

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did youknow


Electricity generating capacity has three general categories. Nameplate capacity, determined by the generator's manufacturer, is the generating unit's maximum output of electricity without exceeding specified thermal limits.Net summer capacity and net winter capacity are the maximum instantaneous electricity load a generator can support during the summer or winter, respectively. These values may differ because of seasonal variations in the temperature of generator cooling fluid (water or ambient air).

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Energy sources for U.S. electricity generation

The mix of energy sources for generating electricity in the United States has changed over time, especially in recent years. Natural gas and renewable energy sources account for an increasing share of U.S. electricity generation, while coal-fired electricity generation has declined. In 1990, coal-fired power plants accounted for about 42% of U.S. electricity generating capacity and about 52% of total electricity generation. By the end of 2018, coal's share of electricity generating capacity decreased to 22% and accounted for 27% of total electricity generation. During the same period, the share of natural gas-fired electricity generating capacity increased from 17% in 1990 to 43% in 2018, and its share of electricity generation nearly tripled from 12% in 1990 to 35% in 2018.

Most nuclear and hydropower plants were built before 1990. Nuclear energy's share of total U.S. electricity generation has held steady at about 20% since 1990. Electricity generation from hydropower, historically the largest source of renewable electricity generation, fluctuates from year to year because of precipitation patterns.

Total U.S. electricity generation from nonhydro renewables is increasing

Renewable electricity generation from sources other than hydropower has steadily increased in recent years, mainly because of additions to wind and solar generating capacity. Since 2014, total annual electricity generation from utility-scale nonhydro renewable sources has been greater than hydropower generation.

Wind energy's share of total utility-scale electricity generating capacity in the United States grew from 0.2% in 1990 to about 9% in 2018, and its share of total annual utility-scale electricity generation grew from less than 1% in 1990 to nearly 7% in 2018.

Although relatively small in terms of its share of total U.S. electricity capacity and generation, solar electricity generating capacity and generation has grown significantly in recent years. Utility-scale solar electricity generating capacity rose from about 314 MW—or 314,000 kW—in 1990 to about 31,928 MW (or 31 million kW) at the end of 2018, of which about 94% was solar photovoltaic systems and 6% was solar thermal-electric systems. Solar energy's share of total U.S. utility-scale electricity generation in 2018 was about 1.6%, up from less than 0.1% in 1990. In addition, EIA estimates that by the end of 2018, the United States had 30,171 MW of small-scale solar photovoltaic generating capacity, and total electricity generation from small-scale photovoltaic systems was about 30 billion kWh during the year.

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The number of small-scale distributed solar photovoltaic (PV) systems, such as those found on the roofs of buildings, has grown significantly in the United States during the past several years. Estimates of small-scale solar PV capacity and generation by state and sector are included in the Electric Power Monthly. As of the end of 2018, almost 40% of total U.S. small-scale solar PV electricity generating capacity was in California.

Various factors influence the mix of energy sources for electricity generation

The major factors that have contributed to changes in the U.S. electricity generation mix in recent years include

  • A decline in natural gas prices
  • State requirements to use more renewable energy sources
  • Availability of government and other financial incentives for building new renewable capacity
  • Federal air pollution emission regulations for power plants
  • Slowing electricity demand

The declining price of natural gas has been a major factor in the rise in natural gas-fired electricity generation and the decline in coal-fired electricity generation since 2008. When natural gas prices are relatively low, high-efficiency, natural gas-fired combined-cycle generators can supply electricity at a lower cost than coal-fired generators. Coal-fired power plants then operate less often and earn less revenue, which decreases their profitability and reduces the incentive to invest in new coal-fired generating capacity. Sustained low natural gas prices encourage development of new natural-gas fired capacity. Unlike coal-fired generators, natural gas-fired generators

  • Can be added in smaller increments to meet grid generating capacity requirements
  • Can respond more quickly to changes in hourly electricity demand
  • Generally have lower compliance costs with environmental regulations

Retail electricity sales

U.S. retail electricity sales to end-use customers totaled 3,802 billion kWh—or 3.8 trillion kWh—in 2018, about 79 billion kWh more than in 2017. Retail sales include net imports (imports minus exports) of electricity from Canada and Mexico.

  • The sales of electricity to major types of U.S. retail customers and shares of total sales in 2018 were
  • residential1,464 billion kWh39%
  • commercial1,377 billion kWh36%
  • industrial953 billion kWh25%
  • transportation8 billion kWh0.2%

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Who sells electricity?

Four major types of electricity providers sell electricity to end-use consumers.

  • The shares of electricity sales by type of provider in 2018 were
  • investor-owned utilities57%
  • power marketers16%
  • federal, state, and local utilities15%
  • electric cooperatives12%

About 0.4% of electricity sales in 2018 were by other types of providers. In addition to sales to end-use customers, electricity is also often traded on wholesale markets or through bilateral contracts.

Last updated: January 2, 2020