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EIA Short Term Energy Outlook

The EIA recently put out a short-term energy outlook, which analyzed how the upcoming winter will look for all areas of the energy industry. Because of just how severe this summer was, perhaps it’s pressing to look ahead and contrast with what looks to be a completely manageable winter for the U.S. and by extension, Texas. 

This is extrapolated from the EIA short-term winter fuels outlook as well. But as is discussed, a forecasted “milder weather” will mean less fuel usage to heat houses. Depending on region, a Texas home heated by natural gas will be more expensive due to natural gas markets, as is discussed in the same report: 

“In contrast to the national average, EIA forecasts that expenditures will increase for homes that heat with natural gas in the Midwest and South as a result of higher retail natural gas prices.”

 

But on average, everything is expected to drop in the home-heating department, meaning that the majority of customers will see a drop in their bill by 1%.

The overall outlook also extends into the beginnings of 2020, so the data looks beyond the winter on a more surface level basis. We will briefly explore electricity, coal, renewables, emissions, and natural gas when considering the EIA’s projections.

Electricity, Coal, and Natural Gas: Greatest Hits of the Energy Outlook

Perhaps a positive effect of having warm overall temperatures this year is that we can expect a milder winter. This means less expensive energy bills due to decreased furnace usage and winter fuels in Texas and other southwestern states mainly, as discussed above. 

Looking past the winter and into 2020, the amount of electricity generated by natural gas plants will rise. This will most likely be necessitated by the continual decrease of coal plants. The EIA says coal will continue to fall by another 11% in 2020. 

Additionally, natural gas saw increased consumption this year, but because surplus storage, the prices stayed low in the last half of the year. The EIA forecasts natural gas production to stay relatively flat and prices to actually decrease through the early 2020 year because of the oversupply at the Henry Hub. This is all despite an increasing demand for natural gas to generate electricity across the country. 

Renewables and Emissions

Electricity derived from wind energy will increase from 10% to 12% in 2020, owing to the continual rise in renewable energy initiatives (especially in Texas). As the outlook states, “Texas accounts for 19% of the U.S. non-hydropower renewables generation in 2019 and 22% in 2020.”

As coal slowly dies out, CO2 levels are going to keep falling. By this time next year, CO2 levels will have dropped 4.1% in comparison to 2018 levels. A lot of this has to do with what they project to be a year that sees less household energy consumption overall.

Wind to Surpass Coal in Texas in 2020

 

Texas wind power has been impressive for some time now. It was this year after all that wind surpassed coal for energy production, offering 22% of all energy generated in the state in the first half of the year. And the divide between coal and wind will only grow larger come 2020. 

This is a huge difference from a decade ago when experts lamented the future of renewables, pegging them for energy generation pipe dreams. But with Texas having the most amount of wind power out of any state, reliance on this renewable is obviously very viable. 

And the rest of the world, according to BP, will follow suit with renewable energy sources to make up for increasing global energy demands: BP says that by 2040, the global energy demand will grow by a third. Additionally, natural gas and renewables will rise commensurately to generate enough energy. 

Wind Power Projections and Stats

In Texas, the Department of Energy projects that wind energy will account for 24% of all Texas energy in 2020, according to the Houston Chronicle. So, combined with coal’s steady decline as of late, forecasters are confident that wind will overtake coal all of next year, and possibly for the foreseeable future in Texas.

This contradicts what Trump says about wind energy, showing instead that wind is as relevant as ever and will continue to rise in the states. It also accounted for 114,000 jobs last year, which makes it a pretty robust talking point for not only environmental health but also employment growth.

The EIA, in their September energy review, show that renewable energy has continued to rise across all sectors for electricity generation, and that coal has consistently fallen. In addition, hydroelectric has always accounted for much more energy production, but recent national trends show wind and hydroelectric almost intersecting on the Y-axis for most graphs. This convergence speaks to just how quickly wind has progressed throughout the country. 

So, with renewables becoming cheaper and offering more jobs, the rest of the country will only add to the continually climbing numbers of renewable energy generation. Can’t argue with that.

Cheap Natural Gas Leads to Falling Consumer Electricity Rates

Plunging oil prices may have hit some energy companies hard and have some oil-producing nations worried about their budget deficits, but it has been a boon to the average American consumer as electricity rates have dropped 1% nationwide to an average of 12.4 cents per kilowatt hour, the first nationwide decline in energy prices in decades.

electricity_rates

As developed nations move away from burning dirty coal for energy as a result of the efforts to meet international greenhouse emission caps, cleaner burning natural gas plants and alternative energy sources (wind, sun, geothermal, etc) are filling in the gaps. Natural gas is now the major source of fuel for energy producing plants, and a 28% drop in the price of natural gas for energy producers over the first half of the year has translated into big gains for consumers nationwide.

However, the replacement of coal burning plants with plants that use natural gas and a plunging price in hydrocarbons is not the entire story. Solar and wind energy in particular continue to become more efficient with advancing technologies, and are taking an increasing share of national, and international, energy production. This year the United Kingdom produced more energy from solar panels than from burning coal, and marked the first day since 1882 that no energy was produced from the burning of coal across the entire nation.

The state of Texas has enjoyed an even greater drop in consumer electricity prices, down 6% to 11 cents per kilowatt hour, thanks to easy access to plentiful supplies of cheap natural gas and a deregulated market. The deregulated market has allowed producers to adjust their prices sooner to reflect the lower cost of natural gas, and then pass these savings on to the consumer.

New England, which has a similar share to Texas of energy produced by natural gas, saw a similar decline in electricity rates over the year. However, the biggest decline of 12% was observed in the state of Hawaii, which uses oil for the vast majority of its energy production. The steep decline in the price of oil helped to bring electricity rates down substantially, albeit from a position that was far above the national average as a result of the state’s remote location and the difficulties that its geography causes for the installation of energy infrastructure.

 

Natural Gas To Surpass Coal As Source Of CO2

Natural gas is expected to soon surpass coal as a source of CO2.  As natural gas continues to replace coal as a fuel for the production of electricity for the nation’s electric grids, the total amount of emissions coming from natural gas activity will pass that of coal in 2016.

coal nat gas and CO2

Energy related CO2 emissions from natural gas are expected to exceed that of coal by 10% in 2016.  The total amount of electricity generated by natural gas reached record highs in the U.S. in July of 2016.  The nearly 5,000 gigawatts per day surpassed the previous record in 2015 by around 9%.  This was due partially to high temperatures as well as the continuing price advantage of natural gas over coal.  For the year, electricity from natural gas is expected to account for around 34% of power output compared to 30% for coal.

As ever tightening federal mandates force coal plants to either modernize or shut down, coal based electricity output has been in a multi-year down trend in the US.  This is expected to continue in the years to come. Much of this lost production has been replaced by renewable sources of power such as solar and wind.  The latter is particularly the case in Texas.

This all comes on top of another trend that has seen overall electricity sales declining thanks in part to greater energy efficiency in residential construction as well as federal energy efficiency mandates.  Lower peaks in electricity demand tend to favor cleaner sources of power. Coal and natural gas are considered more responsive sources of power generation and more likely to be ramped up in times of greater peak demand.

Electricity Rates

The gradual shift of electricity production away from coal and toward natural gas and renewable sources of power has not put upward pressure on electricity rates.  The national average for electricity for July 2016 was 13.0 cents per kwh.  By comparison, a 12 month electricity plan can be found for 6.3 cents per kwh in the Dallas, Texas area as of the time of this writing.

 

Solar In, Coal Out, In Texas Electricity Grid

Going forward almost all new electricity in Texas will come from renewable energy sources – primarily solar energy.  This is according to a report released by the agency responsible for maintaining the Texas electricity grid.  Once the dominate sources of electricity in Texas, coal has been on its way out for a number of years.  Due to a combination of market forces and federal regulations, coal can no longer compete with other sources or power.

The report looks at a number of possible scenarios to project the makeup of the Texas electricity market over the next 15 years.  The scenarios include High Economic Growth, Recession, and Extended Extreme Weather.

Under every scenario solar energy is the predominate theme. It seems that solar energy is finally having its moment in the Texas sun.  Today the state gets a tiny percentage of its energy from solar power.  According to the latest projections, this amount will soar to around 17% in the next 15 years.  Practically all of the gains in solar will come at the expense of coal.

Solar energy projections Texas

The Texas deregulated electricity market is designed to allow competition to keep electricity rates low.  The largest component of electricity rates is the wholesale price of electricity paid to the producers from retail electricity providers.  The fact is, electricity generated by solar power is now cheap and getting cheaper.

This is not just a Texas phenomenon.  Worldwide, solar energy is expected to be the cheapest source of new energy over the next 15 years.  Between now and 2040, 43% of new capacity worldwide is expected to come in the form of solar.

Pressure on coal is not coming just from competition from clean energy sources.  Tough federal regulations will continue to have their intended effect over the coming years.   Over the next 5 years alone, 5 gigawatts of coal power will be leaving the Texas electricity grid because of the EPA’s “regional haze rule”.  Against this, 14 to 28 gigawatts of solar power are expected to come on line in Texas over the next 15 years.

See Also:  Enough Electricity In Texas For Spring As Renewable Energy Surges

See Also: Wind Energy Provides Cheap Electricity In Texas

 

Coal’s Importance To Texas Electricity Continues To Decline

smokestackThe use of coal to generate electricity in Texas continues to slide.  Just ten years ago, half of the electricity in Texas came from the burning of coal.  Today, coal only contributes 20%.

Why the huge drop off?  The two main factors are natural gas and wind energy, with solar and hydro also playing a part.

Texas is by far the largest producer of natural gas in the U.S., more than doubling the production of the #2 state, Pennsylvania.  Texas is now producing so much natural gas, that a pipeline is being built that will send a significant amount of natural gas to Mexico to be used by their electricity generators.

Texas also produces more electricity via wind energy than any other state.  There have already been days when the state saw more electricity produced from wind than from coal.

It is expected that by 2020, more than half of all coal-burning power plants in Texas will be shuttered.

 

ERCOT Releases The 2014 Breakdown Of Electricity Generation In Texas

West Texas wind energyJust 10 years ago, the majority of electricity generated in Texas was derived from the burning of coal. Since then, the state has taken great strides to diversify away from the high carbon-emitting energy source.

The electricity production numbers are now available for 2014. Last year Texas generated 36% of its electricity from coal, 41% from natural gas, 12% from nuclear plants and 11% from wind.

Texas is the largest producer of wind energy in the U.S., accounting for 20% of all wind energy produced in the nation. As additional transmission lines get more of West Texas and the Panhandle connected to the ERCOT grid, that number should continue to grow.

See Also: New Transmission Lines To Bring West Texas Wind To Dallas And Austin