Natural gas continues to grow
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.
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.
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