In EIA's Annual Energy Outlook 2014 (AEO2014) Reference case, electricity generation is expected to increase by 29% between 2012 and 2040, at an average annual rate of 0.9%, to meet steadily increasing demand. In the recently released Low Electricity Demand case, total electricity use in 2040 is just 7% higher than 2012 levels. Under lower electricity demand growth, the share of generation from coal and natural gas declines compared with the Reference case, while the shares of generation from nuclear and renewables increase.
Total electricity sales declined in four of the five years between 2008 and 2012, driven by declining sales in the industrial sector and flat sales in the residential and commercial building sectors. Although industrial sales have shown some recovery since the 2009 recession, there are a number of factors that could contribute to slower demand growth in the future across all sectors, including changing customer behavior, increased use of distributed generation, and additional efficiency standards. The Low Electricity Demand case projects lower demand in 2040 across all sectors compared with the Reference case, through assumptions related to efficiency improvements and costs of new technologies, specifically:
In the Low Electricity Demand case, little new generating capacity is added in the power sector after planned capacity additions are completed. There are no new additions of coal or nuclear capacity after 2020, and only 22 gigawatts (GW) of new natural gas capacity is added in the power sector after 2020. Significant amounts of new renewable capacity are added throughout the projection, with more than 80% of these additions in the end-use sectors as a result of the lower cost assumptions for distributed solar PV. The lower levels of demand and lower electricity prices drive additional retirements of both coal-fired and oil and natural gas-fired capacity in the power sector, while nuclear retirements are unchanged from the Reference case. These changes in capacity additions and retirements directly affect projected generation by fuel:
Because the lower future electricity demand results in large reductions in both coal- and natural gas-fired generation, total carbon dioxide (CO2) emissions in the power sector decline from 2012 levels by 13% by 2018, and remain 13%-14% below 2012 levels throughout the projection period. In contrast, CO2 emissions in the power sector increase by 11% between 2012 and 2040 in the Reference case.
Additional analysis can be found in the AEO2014 Issues in Focus discussion of the implications of low electricity demand growth.
Principal contributor: Laura Martin