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 the electricity used to operate the power plant. Energy storage systems for electricity generation have negative-net generation because they use more energy to charge the storage system than the storage system generates.
• Capacity: the maximum amount of electric power (electricity) that a power plant can supply at a specific point in time under specific conditions.
• Sales: the amount of electricity sold to consumers accounts for most U.S. electricity consumption.

More electricity is generated than sold because some energy is lost (as heat) in electricity transmission and distribution. In addition, some electricity consumers generate electricity and use most or all of it; the amount they use is called direct use. These consumers include industrial, 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 generation-capacity:

• Utility scale includes electricity generation and capacity of electric power plants with at least 1,000 kilowatts, or 1 megawatt (MW), of electricity-generation capacity.
• Small scale includes generators with less than 1 MW of generating capacity and are usually located at or near where the electricity is consumed. Solar photovoltaic systems installed on building rooftops account for the majority of small-scale systems.

Electricity generation

In 2023, net generation of electricity from utility-scale generators in the United States was about 4,178 billion kilowatthours (kWh) (or about 4.18 trillion kWh). EIA estimates that an additional 73.62 billion kWh (or about 0.07 trillion kWh) were generated with small-scale solar photovoltaic (PV) systems.

In 2023, about 60% 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 21% was from renewable energy sources.

• The percentage shares of utility-scale net electricity generation by major energy sources in 2023 were:¹
• Natural gas43.1%
• Nuclear18.6%
• Coal16.2%
• • Renewables (total)21.4%
  • Nonhydroelectric renewables15.6%
  • Hydroelectric5.7%
• petroleum and other0.8%

Electricity generation 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 supply the right amount of electricity to 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 and most generating units vary their output. Operating strategies for generators can be grouped into three major types:

• Base-load service normally supplies all or part of the minimum, or base, demand (load) on a system. Base-load generating units tend to run nearly continuously. Nuclear power plants generally operate as base-load service because of their low fuel costs and technical restrictions on load responsive operation. Geothermal, biomass-fired units, and many large hydro generators are also often operated as base-load resources because of their low fuel costs. In industrial applications that require process heat, generators that provide combined-heat-and-power service often operate as base-load resources for facility support.
• Intermediate-load service makes up the largest generating sector and provides load responsive operation. The demand profile for intermediate generators tends to vary over time and intermediate sources are, in general, technically and economically suited for following the changes in demand. Many natural gas-fired combined-cycle applications operate as intermediate resources because of their low operating costs and ability to ramp up and down quickly, which allows them to follow changes in demand.
• Peak-load service helps to meet electricity demand when demand is at its highest, or peak, such as in the late afternoon when electricity use for air conditioning increases during hot weather. Peaking units can serve relatively short demand periods, often a few hours a day, to support air-conditioning loads. Daily peaking units are mostly natural gas- or petroleum-fueled internal combustion engine or combustion turbine generators. In general, these generators are relatively inefficient and are costly to operate but provide high-value service during peak demand periods. Other peaking units may operate in a seasonal capacity and operate for extended time periods, perhaps for several days or weeks, to support the grid during extreme hot or cold weather conditions. In some cases, pumped storage hydropower and conventional hydropower units also support grid operations by providing power during peak demand.

Additional categories of electricity generators include:

• Intermittent renewable resource generators include wind and solar energy power plants, which generate electricity only when wind and solar energy resources are available. 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 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. Energy storage provides a variety of services to support electric power grids. In some cases, energy storage may be paired or co-located with other generation resources to improve the economic efficiency of one or both systems.
• Distributed generators are connected to the electricity grid, but they primarily supply some or all electricity demand of individual buildings or facilities. Sometimes, these systems may generate more electricity than the facility consumes, and the surplus electricity is sent to the grid. Most small-scale solar photovoltaic systems are distributed generators.

Over the last decade, the industry generating portfolio has significantly changed as intermittent generators emerged from a relatively small share of the industry to a relatively large share. In 2010, wind and solar generators were only 4% of total utility-scale generating capacity. Now, these intermittent resources collectively represent 18% of that capacity. As a result, generator operating strategies have shifted across the industry. Units that used to operate in base load might now follow an intermediate strategy. Other units in both the base-load and intermediate categories that have operational flexibility might vary their output over a wide range to minimize the costs of startups and shutdowns.

The metric commonly used to classify an operating strategy is capacity factor. Capacity factor is the ratio of actual output to the total potential output over time. Because so many variables and considerations affect capacity factor, no strict definitions separate base load, intermediate, and peaking operating strategies. However, for general purposes, capacity factors of 70% or higher indicate base-load operation is occurring. Units that operate in peaking service tend to run at less than 15% capacity factor. Intermediate service falls between peaking and base load.

Some types of power plants may use more electricity to operate than they generate, and therefore, may have negative net generation monthly or annually. For example, peak-load generating units may be idle for relatively long time periods. However, they require electricity—either from the power plant they are part of or from the electric power grid—to be ready to operate when they are needed to supply power to the grid. 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 and repair activities may also take generators offline for extended time periods, which may result in negative net generation for the facility. Energy storage facilities generally use more electricity than they generate and have negative net generation.

At the end of 2023, the United States had 1,189,492 MW—or about 1.19 billion kW—of total utility-scale electricity-generation capacity. Generating units fueled primarily with natural gas accounted for the largest share of U.S. utility-scale electricity-generation capacity in 2023.

• The percentage shares of total U.S. utility-scale electricity-generation capacity by primary energy source in 2023 were:¹
• Natural gas42.7%
• • Renewables (total)28.1%
  • Nonhydroelectric21.3%
  • Hydroelectric6.7
• Coal15.2%
• Nuclear8.0%
• Petroleum2.4%
• Other sources3.5%

Changes in 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, and coal-fired electricity generation has declined. In 1990, coal-fired power plants accounted for about 42% of total U.S. utility-scale electricity-generation capacity and about 52% of total electricity generation. By the end of 2023, coal's share of electricity-generation capacity was 15% and coal accounted for about 16% of total utility-scale electricity generation. The share of natural gas-fired electricity-generation capacity increased from 17% in 1990 to 43% in 2023, and its share of electricity generation more than tripled from 12% in 1990 to 43% in 2023.

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 leading source of total annual utility-scale renewable electricity generation (until 2014), fluctuates from year to year because of precipitation patterns.

Electricity generation from nonhydro renewables

Renewable electricity generation from sources other than hydropower has steadily increased in recent years, mainly because of additions to wind and solar generation capacity. Since 2013, total annual electricity generation from utility-scale nonhydropower renewable sources has been greater than from total annual hydropower.

Wind energy's share of total utility-scale electricity- generation capacity in the United States grew from 0.2% in 1990 to about 12% in 2023, and its share of total annual utility-scale electricity generation grew from less than 1% in 1990 to about 10% in 2023.

Although relatively small in terms of its share of total U.S. electricity-generation capacity and generation, solar electricity-generation capacity and generation have grown significantly in recent years. Utility-scale solar electricity-generation capacity rose from about 314 MW (314,000 kW) in 1990 to about 91,309 MW (about 91 million kW) at the end of 2023. 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 2023 was about 3.9%, up from less than 0.1% in 1990. In addition, EIA estimates that at the end of 2023, the United States had 47,704 MW of small-scale solar PV generation capacity, and that about 74 billion kWh were generated by small-scale PV systems.

Factors that affect 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
• Changes in electricity demand

A general decline in the price of natural gas for electric power producers has been a major factor in increased natural gas-fired electricity generation and the decrease of 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 generation capacity. Sustained low natural gas prices encourage development of new natural-gas fired generation 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
• Can have lower compliance costs for environmental regulations

Retail electricity sales

U.S. retail electricity sales to end-use customers was about 3,861 billion kWh (about 3.9 trillion kWh) in 2023, about a 66 billion decrease 2022. Retail sales include net imports (imports minus exports) of electricity from Canada and Mexico.

• Electricity sales to U.S. retail-electricity customers and percentage shares of total sales in 2023 were:²
• Residential1,455 billion kWh38%
• Commercial1,375 billion kWh36%
• Industrial1,025 billion kWh27%
• Transportation7 billion kWh<1%

Electricity providers

Electricity providers can be grouped into full-service providers, which sell bundled electricity services—energy (electricity) and delivery—to end users and other providers.

Full-service providers generate electricity from power plants that they own and sell the electricity to their customers or other types of providers. They may also, in turn, purchase electricity from other full-service providers or from independent power producers. Full-service providers include:

• Investor-owned utilities: electric utilities whose stock is publicly traded
• Public entities: municipalities, state power agencies, and municipal marketing authorities
• Federal entities: power producers and marketers either owned or financed by the federal government
• Cooperatives: 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. Other providers mostly include electricity marketers that operate in states that have customer choice for selecting electricity providers. Full-service providers deliver the electricity for the electricity marketers to consumers. Direct electricity transactions also happen between independent power producers and (usually large) electricity consumers.

• The percentage shares of electricity sales by type of provider in 2022 were:³
• Investor-owned utilities57%
• Public and federal entities16%
• Cooperatives13%
• 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 16, 2024; data for 2023 are preliminary.