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

Terms that are important to understand when learning about electricity production and consumption include:

• Generation—a measure of electricity produced over time. Most electric power plants use some of the electricity they produce to operate the power plant. Net generation excludes electricity use for power plant operations.
• Capacity—the maximum level of electric power (electricity) that a power plant can supply at a specific point in time under certain conditions.
• Sales—the amounts 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 electric power plants with at least 1,000 kilowatts, or 1 megawatt (MW), of total electricity generating capacity.
• Small scale—includes generators with less than 1 MW of generating capacity and that are usually at or near where the electricity is consumed. Most solar photovoltaic systems installed on building rooftops are small-scale systems.

Electricity generation

In 2021, net generation of electricity from utility-scale generators in the United States was about 4,116 billion kilowatthours (kWh) (or about 4.12 trillion kWh). EIA estimates that an additional 49.03 billion kWh (or about 0.05 trillion kWh) were generated with small-scale solar photovoltaic (PV) systems.

In 2021, about 61% 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 20% was from renewable energy sources.

• The percentage shares of utility-scale electricity generation by major energy sources in 2021 were:
• natural gas38.3%
• coal21.8%
• nuclear18.9%
• • renewables (total)20.1%
  • nonhydroelectric renewables13.8%
  • hydroelectric6.3%
• petroleum and other0.9%

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 electric power grid. A base load generating unit runs continuously, producing electricity at a nearly constant rate throughout most of the day. Nuclear power plants generally operate as base load service, because of their low fuel costs and the technical limitations on load responsive operation. Geothermal and biomass units are also often operated in base load because of their low fuel costs. Many of the large hydro facilities, several coal plants, and an increasing number of natural gas-fired generators, particularly those in combined power applications, also supply base load power.
• Peak load generating units help to meet electricity demand when demand is at its highest, or peak, such as in late afternoon and as when electricity use for air conditioning and heating increases during hot weather and cold weather respectively. These so-called peaking units are generally natural gas or petroleum fueled generators. In general, these generators are relatively inefficient and are costly to operate, but provide high- value service during peak demand periods. In some cases, pumped storage hydropower and conventional hydropower units also support grid operations by providing power during periods of peak demand.
• Intermediate load generating units comprise the largest generating sector and provide load responsive operation between base load and peaking service. The demand profile varies over time and intermediate sources are in general technically and economically suited for following changes in load. Many energy sources and technologies are used in intermediate operation. Natural gas-fired combined cycle units, which currently provide more generation than any other technology, generally operate as intermediate sources.

Additional categories of electricity generators include:

• Intermittent renewable resource generators powered by wind and solar energy that generate electricity only when these resources are available (i.e., when it's windy or sunny). When these generators are operating, they tend to reduce the amount of electricity required from other generators to supply the electric power grid.
• Energy storage systems/facilities for electricity generation, including hydroelectric pumped storage, solar-thermal storage, batteries, flywheels, and compressed air systems. Energy storage systems for electricity generation use electricity (or some other energy source, such as solar thermal energy) to charge an energy storage system or device that is discharged to supply (generate) electricity when needed at desired levels and quality. Some energy storage facilities use electricity produced with intermittent renewable energy sources (wind and solar) when the renewable resource availability is high and use the storage system to provide electricity when the renewable energy resource is low or unavailable. Energy storage systems can also provide ancillary services to the electric power grid. Energy storage applications inherently use more electricity than they provide. Pumped-storage hydro systems use more electricity to pump water to water storage reservoirs than they produce with the stored water. (However, some may generate more electricity than they use because natural precipitation augments their water storage capacity over the amount the facility pumps to storage.) Nonhydro storage systems have energy conversion and storage losses. Therefore (most) energy storage facilities for electricity generation have net negative electricity generation balances. Gross generation provides a better indicator about the activity level of energy storage facilities and is provided in the data releases of the EIA-923 Power Plant Operations Report.
• 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.

Some types of power plants may actually use more electricity to operate than they generate and therefore may have negative net generation on a monthly or annual basis. For example, peak load generating units may be idle for relatively long periods of time. However, they require power from the power plant in which they are part of, and/or from the electric power grid, to be in operable condition when called upon to supply power. Over an entire month or year, their electric generation may be less than the power they used while they were waiting to be dispatched. Power plant maintenance or repair activities may also take generators off-line for extended periods of time and result in negative net generation for the facility. Energy storage facilities for electricity generation (generally) use more electricity than they generate and have negative generation.

At the end of 2021, the United States had 1,143,757 MW—or about 1.14 billion kW—of total utility-scale electricity generating capacity and about 32,972 MW—or nearly 0.03 billion kW—of small-scale 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 percentage shares of total U.S. utility-scale electricity generating capacity by primary energy source in 2021 were:
• natural gas43%
• coal18%
• • renewables (total)27%
  • nonhydroelectric16%
  • hydroelectric9%
• nuclear8%
• petroleum2%
• other sources0.5%

Energy sources for U.S. electricity generation

The mix of energy sources for U.S. electricity generation 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 total U.S. utility-scale electricity generating capacity and about 52% of total electricity generation. By the end of 2021, coal's share of electricity generating capacity was at 18% and coal accounted for about 22% of total utility-scale electricity generation. During the same period, the share of natural gas-fired electricity generating capacity increased from 17% in 1990 to 43% in 2021, and its share of electricity generation more than tripled from 12% in 1990 to 38% in 2021.

Most U.S. nuclear and hydropower plants were built before 1990. Nuclear energy's share of total annual U.S. electricity generation has held steady at about 20% since 1990. Electricity generation from hydropower, historically the largest source of total annual utility-scale renewable electricity generation (until 2019), 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 total annual 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 12% in 2021, and its share of total annual utility-scale electricity generation grew from less than 1% in 1990 to about 9% in 2021.

Although relatively small in terms of its share of total U.S. electricity capacity and generation, solar electricity generating capacity and generation have grown significantly in recent years. Utility-scale solar electricity generating capacity rose from about 314 MW—or 314,000 kW—in 1990 to about 61,014 MW (or about 61 million kW) at the end of 2021, of which about 98% was solar photovoltaic systems and 2% was solar thermal-electric systems. Solar energy's share of total U.S. utility-scale electricity generation in 2021 was about 2.8%, up from less than 0.1% in 1990. In addition, EIA estimates that at the end of 2021, there were 32,972 MW of small-scale solar photovoltaic generating capacity, and electricity generation from small-scale photovoltaic systems totaled was about 49 billion kWh.

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:

• The combined effect of several years of low natural gas prices and the performance advantages of new natural gas technologies, particularly highly efficient combined cycle generators
• Generally decreasing costs for deploying wind and solar generators
• 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
• A slowing of growth in electricity demand

A general decline in the price of natural gas for electric power producers 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 about 3,795 billion kWh—or about 3.8 trillion kWh—in 2021, an increase of about 77 billion kWh from 2020. 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 percentage shares of total sales in 2021 were:
• residential1,477 billion kWh39%
• commercial1,325 billion kWh35%
• industrial987 billion kWh26%
• transportation6 billion kWh0.2%

Who sells electricity?

There are two general categories of electricity providers: full service providers, which sell bundled electricity services—energy (electricity) and delivery to end users, and other providers.

Full service providers may generate electricity from power plants that they own and sell the electricity to their customers and they may sell some of it to other types of providers. They may in turn purchase electricity from other full service providers or from independent power producers, which they sell to their customers. There are four general types of full service providers:

• Investor owned utilities are electric utilities whose stock is publicly traded.
• Public entities include municipalities, state power agencies, and municipal marketing authorities.
• Federal entities are either owned or financed by the federal government.
• Cooperatives are electric utilities owned by and operated for the benefit of the members of the cooperative.

Other providers market and sell electricity to the customers of full service providers or provide only electricity delivery services to consumers. They mostly include electricity marketers that operate in states where there is customer choice for selecting electricity providers. Full service providers deliver the electricity for the electricity marketers to consumers. There are also direct electricity transactions from independent power producers to (usually large) electricity consumers.

• The percentage shares of electricity sales by type of provider in 2020 were:
• investor-owned utilities57%
• public and federal entities16%
• cooperatives12%
• other providers15%

In addition to sales to end-use customers, electricity is also often traded on wholesale markets or through bilateral contracts.

Last updated: July 15, 2022, with data from the Electric Power Monthly, February 2022; data for 2021 are preliminary.