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Natural gas continues to grow

EIA Electricity Generation by 2040

The Energy Information Administration (EIA) expects natural gas to account for 31% of electricity generation by fuel type by 2040. In the EIA’s Annual Energy Outlook (AEO) 2015, the administration predicts that the percentage of electricity of generated from natural gas will gain 4% of the market share on top of its existing 27% share in 2013.

Based off the AEO 2015 reference case, electricity consumption will increase at an average annual rate of 0.8% from 2013 to 2040, nearly in line with expected population growth.

Wind blows past other renewables

Renewable sources of energy are expected to grow the most by 2040, increasing their share of electricity generation by 5% to 18% of the overall mix. Wind generation is expected to show the largest absolute increases in renewable generation, supplanting hydropower as the largest renewable generation source by 2040.

EIA Renewable Growth by 2040

The expected growth in both natural gas and renewable energy sources is part of a larger push towards lower carbon emissions, according to the EIA. Just how much natural gas generation grows will be dependent largely on gas prices as it competes with coal. If natural gas prices stay low, there would be strong incentives for electric generation plants to switch from coal. In the EIA’s High Oil and Gas Resource case – which assumes greater oil and natural gas resources lead to delivered natural gas prices to the electric power sector being 44% below the Reference case in 2040 – natural gas becomes the leading source of generation by 2020, accounting for 42% of total generation by 2040.

EIA Electricity Generation by Case

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.