Electricity
- The share of electricity generation produced by natural gas in the United States averages 36% in 2021 and 35% in 2022 in our forecast, down from 39% in 2020. In 2021, our forecast share for natural gas as a generation fuel declines in response to our expectation of a higher delivered natural gas price for electricity generators, which we forecast will average $5.12/MMBtu compared with $2.39/MMBtu in 2020. As a result of the higher expected natural gas prices, the forecast share of electricity generation from coal rises from 20% in 2020 to about 23% in 2021 and 22% in 2022. For renewable energy sources, new additions of solar and wind generating capacity are offset somewhat by reduced generation from hydropower this year, resulting in the forecast share of all renewables in U.S. electricity generation to average 20% in 2021, about the same as last year, before rising to 22% in 2022. The nuclear share of U.S. electricity generation declines from 21% in 2020 to 20% in 2021 and 2022.
- We expect coal consumption in the electric power sector to rise by 80 million short tons (MMst), or 18%, in 2021. The increase in the electric power sector’s use of coal reflects higher natural gas prices this year compared with last year. However, electricity generation from coal-fired power plants has not increased as much in response to rising natural gas prices as it has in the past or by as much as our models had forecast earlier this year. The lower price responsiveness of coal for electricity generation, which is likely the result of constraints on coal supply and low coal stocks, is contributing to upward pressure on natural gas prices.
- Planned additions to U.S. wind and solar capacity in 2021 and 2022 increase electricity generation from those sources in our forecast. We estimate that the U.S. electric power sector added 14.6 gigawatts (GW) of new wind capacity in 2020. We expect 17.0 GW of new wind capacity will come online in 2021 and 6.9 GW in 2022. Utility-scale solar capacity rose by an estimated 10.5 GW in 2020. Our forecast for added utility-scale solar capacity is 15.7 GW for 2021 and 18.2 GW for 2022. We expect significant solar capacity additions in Texas during the forecast period. In addition, we project that after increasing by 4.5 GW to 27.7 GW in 2020, small-scale solar capacity (systems less than 1 megawatt) will grow by 5.8 GW in 2021 and by 7.8 GW in 2022.
