PREAMBLE:
The United States uses and produces energy from a variety of sources that are grouped under primary, secondary, renewable or fossil fuels. While fossil fuels (Petroleum, natural gas and Coal) nuclear energy and renewable are grouped under primary energy sources, ‘Electricity’ is under secondary energy source (generated from primary energy sources).
The share of primary energy consumption of the energy-use sectors in 2023 (Quadrillion Btu) were: 32.11 electric power; 27.94 transportation; 22.56 industrial’ 6.33 residential and 4.65 commercial. The total energy Consumption includes primary energy use, purchased electricity, electrical system energy losses and other energy losses.
It is a paradoxical situation in US as the total energy production exceeded total energy consumption since 2019 – 102.83 quads production against 93.59 quads consumption in 2023. The major sources of production in 2023 were 38% Natural gas; 34% Petroleum; 8% Renewable; 11% coal and 8% nuclear electric power. Although fossil fuels dominated US energy mix, this has changed over time
TREND IN 2023:
Petroleum consumption was about 49% in 1978 which decreased to 38% in 2023 though it showed a decline in 2020 due to COVID-19 pandemic. The increasing trend of natural gas plant liquids (NGPL) of 2005 peaked in 2023. NGPLs are the major sources of hydrogen gas liquids (HGL) and their increased production since 2008 has lowered the prices and increased consumption.
Similar trend can be seen in Natural gas consumption with 36% in 2023 against 18% in 1950. Again, increased production resulted in increased consumption by the electric power and industrial sectors. Renewable production and consumption recorded a high in 2023 at 9% of the total primary energy consumption – large increase in solar and wind. Hydropower, biomass energy, biofuels and geothermal being the other renewable contributors had uneven trend.
Surprisingly, coal contribution has declined from 37% (1950) to 9% (2023) as the power sector used other energy sources to reduce coal consumption. Nuclear energy production which showed increasing trend to level off from 2001 through 2019 – peaked in 2020 at 9%.
US power plant operators generated 6.9 million MWh from natural gas on a daily basis according to Energy Information Administration (EIA). This hike in natural gas fired generation has been a result of high temperature across most of the country and steep drop in wind generation. The wind farms produce an average of just 4% of power generation down from 7% and 12% so far in 2024.
DEVIATION FROM MIX ENERGY:
The mix energy trend of US has seen fluctuations over the period and the latest being in 2023 where, about 60% of utility-scale electricity generation was from fossil fuels followed by 19% from nuclear and 21% from renewable energy sources. It is indeed a surprise that the power plants do not produce electricity at their full capacities but, supply the right amount of electricity to the grid at every moment instantaneously. Operating strategies fall under:
1. Base-load service supplies all or part of the minimum or base demand and generally run continuously – Nuclear plants for example. Geothermal, biomass and large hydro generators also fall under this category.
2. Intermediate-load service provides load responsive operation and is technically and economically suited for changes in demand. Natural gas-fired combined cycle is an example because of their low operating costs.
3. Peak-load services meet electricity demand when it is at highest (peak) especially in the late afternoon (air-conditioning during summer). Daily peaking units are mostly natural gas or petroleum-fuel. Often, pumped storage hydropower and conventional hydropower also support peak demand.
Renewable sources (wind and solar) generate electricity only when available and reduce the amount of electricity from other sources. Similarly, energy storage systems are meant to supply electricity when needed. It is sometimes paired with other generation resources in improving the economic efficiency as well. Distributed generators are meant to supply electricity demand of individual building or facilities and when surplus, it is sent to the grid. Intermittent resources that emerged with relatively a small share, has increased its share to 18% of that capacity. This provides leverage to the industry flexibility to shift from base-load.
Some power plants may use more electricity to operate and therefore have negative net generation – peak-load generating units may idle for long periods. Thus, their generation may be less than the power they used. United States had 1,189,492 MW in 2023 primarily fuelled with natural gas (42.7%) followed by 28.1% renewables; 15.2% coal; 8.0% nuclear; 2.4% petroleum and 3.5% from others.
The mix of energy sources in the US has changed over a period of time with natural gas and renewable accounting for a major share. Coal which accounted for 42% of the utility scale electricity generation and about 52% of the total electricity generation saw a drastic change in 2023 with the generation falling to 16% and 15% respectively. Nuclear energy’s share has been steady at 20% since 1990 with hydro generation fluctuating from year to year.
The annual electricity generation from non-hydro renewable has been greater than from total hydropower – wind rose from 0.2% (1990) to 12% (2023). Similarly, solar contribution has grown from 314 MW to 91,309 MW for the same period.
REASONS FOR A CHANGE:
There are indeed a few reasons for this change from electricity generation mix:
- Several years of low natural gas price combined with gas technologies (Combined cycle generation)
- Decreased cost for deploying wind and solar generators
- Requirements to use more renewable
- Government and other financial incentives for new renewables
- Air pollution emission regulations for power plants
- Electricity demand change
Further, advantages of natural gas fired generators – can add smaller increments to meet grid generating capacity requirements; quick response to changes in hourly electricity demand and lower compliance costs for environmental regulations.
Full service providers generate electricity that they own and sell to customers or other type of providers and can purchase electricity from other full-service providers or independent power producers. Investor owned utilities (57%) stock is publicly traded); public entities (municipalities, state power agencies and municipal marketing authorities); federal entities (16% along with Public) owned or financed by federal government and cooperatives (13%) owned and operated for the benefit of cooperative fall in this Full-service provider category. Other providers share 15%.
FUTURE OPTIONS:
Electric Vehicle (EV) represented 7.6% of total vehicle sales in 2023 which is likely to touch 8.1%. This rise demands parallel establishment of charging stations which seems to have been initiated by National Electric Vehicle Infrastructure (NEVI) program. Such a rise in EV pressurises additional transmission capacity and grid upgrades to ensure future grid reliability. American Clean Power propose around hundred manufacturing facilities/expansion in domestic, utility-scale in 2024.
While the US shows record breaking EV sales, new energy by renewable and promising policy movements on transmission, some fear that there are significant obstacles. Rising interest rates/project costs, permission and siting challenges and supply chain issues are a few in this regard that could hold clean power development back.
Renewables along with energy storage dominated utility-scale generation sources – renewables including hydropower accounted for 25% of electricity generated in the first half of 2023. That does not seem to be enough as energy installation need to be even faster which means it has to be double the rates seen in 2023. This may promote achieving 100% carbon free electricity by 2035.
Minnesota has adopted 100% clean electricity standard with Michigan following it to join California and New York in ambitious reforms intended to ease building clean energy transmission. Several states seem to follow this trend.
Despite the positive progress there are a few obstacles in moving towards clean energy development – Supply chain challenges due to shortages of transformers needed for connecting to the grid (only 20% of transformer demand met by domestic supply). Rise in interest rates have delayed or cancelled due to increased capital cost of the project. Higher project cost, supply chain challenges and a few other factors have seriously affected renewables and power purchase agreements. Associated transmission system is failing to keep pace with clean energy transition.
Summing up, electricity scenario of US faces the following predicaments:
- Electricity demand outpacing the ability to bring on clean energy generation
- Difficulty for the Federal agencies to uphold strict standards to reduce emissions
- New federal funds, tax credits expect fall in interest rates to boost new projects
- Does progress on transmission reforms enable new lines to advance?
- Following this, will the interconnection queue reforms address backlogs?
CONCLUSION:
The above account clearly points to overall inefficiency ahead of 2024 and beyond. Several players starting with policymakers, regulators, developers and manufacturers have an uphill task on their efforts to address key challenges IF, they wish to move closer to clean energy transition.