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Exploring Long-Term Energy Trends in the United States

The 2021 Energy Information Administration (EIA) Annual Energy Outlook report offers a snapshot into current and long-term trends in American energy behaviors. The ongoing pandemic has undoubtedly skewed recent data, with many consumers experiencing increased electricity rates due to the pervasive work-from-home culture. Looking beyond the pandemic, what can energy companies and individuals expect in the next few years — and even decades? Some of the most notable predictions suggest a major shift in types of fuel used to generate electricity as well as a significant generational change in consumer choices toward more energy-efficient options.

Fossil Fuels Take a Back Seat but are Still Along for the Ride

Energy experts are already witnessing a decline in fossil fuels, specifically coal, within the U.S. electricity landscape. In many states, especially in Texas, natural gas and coal, while still the dominant players in the state’s electricity market, are experiencing significant competition from renewables. A decade ago, 37% of the power that Texas electricity providers distributed was coal-generated. Today, at least three of the coal-fired facilities have closed. In general, the U.S. will likely experience increased production in natural gas, largely for industrial purposes and international export. However, natural gas use in the U.S. residential sector won’t experience much growth at all; improvements in energy efficiency will diminish the demand for natural gas heating and electric use.

Climate Change Burdens the Energy Grid

Devastating weather events are on the rise, unfortunately. Wildfires out West, winter storms down South, and massive hurricanes along the coasts are par for the course each year. Should these trends continue, scientists predict an increased burden on the energy grid. Heating and cooling needs in response to severe temperature changes will challenge both power’s reliability and energy rates. One can hope that as coal’s prevalence ebbs and renewables grow, severe weather events will stabilize. Nonetheless, electricity providers are encouraged to invest now in preventative measures to better protect the grid in response to climate change.

future electricity grid

Renewable Energy on the Rise

Renewable energy, especially wind and solar, presents a key player in the U.S. energy market’s future landscape. The EIA predicts that the electric grid’s reliance on renewable energy will double over the next few decades. Texas consumers are already benefitting from a massive initiative in wind power; the Lone Star State has invested billions to better integrate Texas electric companies and the wind industry. The U.S. Department of Energy describes wind power as a low-cost option for electricity generation. Texas electricity rates and rates around the country will likely decrease if more renewables are integrated within the grid. Expect more and more electric companies to offer renewable options for consumers seeking to decrease their carbon footprint. Currently, if one were to compare electricity rates, selecting renewable offerings doesn’t guarantee cheap electricity, but as technology improves, renewable energy rates will become much more affordable.

Consumer Behaviors Lean Towards Energy Efficiency

Long-term data suggests that individuals are opting for more energy-efficient and alternative-fuel vehicles. Starting in 2030, the EIA predicts a sharp increase in electric-battery-powered vehicles, though gasoline will remain the largest contributor for passenger vehicle fuel. Within the home, more and more Americans are selecting smarter technologies that save money long-term on utility bills, like thermostats and kitchen appliances. Millennials and Generation Z, in particular, are overwhelmingly concerned with climate change, leading to more environmentally-conscious consumer decisions as these populations age and their decisions affect the economy.

Energy Rates This Holiday Season Should Be Similar to Last Year’s

With winter comes higher energy bills. Several factors contribute to this trend. Typically, from November to March, Americans perform a delicate dance between saving money and keeping pipes from freezing. For most homeowners, the main culprits of energy use in winter constitute furnaces and water heaters, especially for regions that experience colder seasonal temperatures. But the line-up doesn’t end there — one cannot ignore refrigerators, freezers, and ovens. These appliances work overtime during the season, especially with family in town and large meals to prepare. Then, throw in the power required for Christmas lights and Rudolph’s nose. Hopefully, homeowners can avoid surprising utility bills this holiday season. While unpredictability has defined the year 2020, experts project that — energy bills at least — will remain like those of 2019.

Costs explained

Oil, electricity, and natural gas predominantly heat American homes. Most of the Northern states rely on natural gas, while residents in the South (including Texas) depend on electricity. Only a few New England states employ heating oil. Worldwide, fuel costs have remained roughly the same the past few years; heating oil has dropped over fifty cents per gallon since 2018. As supply increases, demand decreases — or so states a basic tenet of Economics 101. Natural gas production has increased steadily over the last fifteen years, and prices have declined accordingly. Electricity rates have increased a touch, nationwide displaying a small nine cents per kWh increase from 2019.  Electricity rates in Texas have declined over that time. Overall, prices should remain relatively stable for winter 2020. Weather can dramatically alter these projections, however, especially if temperatures drop lower than expected and demand for heating increases.

Some extenuating circumstances should be considered. Due to the Coronavirus pandemic, many Americans spend more time at home, especially for work and school. This suggests higher use of lighting, heating, and power — an unavoidable consequence of the times. Nonetheless, fuel costs have been stunted by low demand from major industries as companies have curtailed traveling and typical functioning within the traditional office environment. Many schools have closed. These big energy users do not currently rely on the grid. As mentioned above — less demand dictates more supply available — leading to cheap energy prices. All in all, Americans have struggled to pay rent and utility bills throughout 2020, and the stability in projected energy rates this winter provides some welcomed relief.

Tips for saving

Furthermore, individuals can implement some energy-saving habits and capitalize on static energy bills. For example, consider cooking larger meals or several meals at once. When the oven is turned off, leave the door open to maximize heating in the kitchen. Only run the dishwasher or laundry machine when fully loaded. Also, remember to unplug holiday lighting before going to sleep. Televisions, laptops, and entertainment systems continue using power even when turned off. Energy-conscious individuals may want to unplug these items when not in use. For those with extra means, purchasing new, more efficient appliances can make a major dent in energy spending long-term — especially for household amenities older than twenty years. A wise consumer should also consider insulation strategies for older homes to help mitigate heating costs.

Saving opportunities don’t have to be difficult or expensive. Individuals can reach out to local electricity companies and discuss strategies and programs they offer. Consumers can leverage services to help compare electricity rates in their region as well. While 2020 has not been easy, customers will gladly receive some good news in the form of energy costs.

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.

Substituting Natural Gas with Electricity (In Texas)?

There is no shortage of new technologies that tout themselves as the next big thing in energy and saving consumers money. But according to a paper by Pecan Street, replacing natural gas usage for electricity would account for more than $400 for average annual savings in the ERCOT area of Texas.

Because close to a third of all natural gas in the country is burned within houses, a switch to electricity has vast benefits for the environment, minimizing emissions in the process. 

A lot of naysayers will point out that the grid will buckle under the added demand, but this switch from natural gas to electricity would clearly not happen overnight. With enough delicacy, the powers at be and ERCOT can achieve a balancing act that doesn’t drain too much of the grid’s capacity. 

ERCOT might not be the most open to hear these sorts of ideas coming off of the crazy summer that Texas had, but many are stating that the grid can handle it. This can lead to a lot of savings if operations are changed accordingly to reinforce a stronger electrification of households.

 Natural Gas as a Long Term Plan? 

Because natural gas is such a staple of the Texas economy, it’s hard to imagine that it will disappear any time soon. That hasn’t stopped cities from banning natural gas though. Cities like Berkeley, California and parts of Massachusetts are banning it outright.

Overall, what may win out is a collection of cities that are investing in the longevity of the climate – The Sierra Club being a notable mention as 100 cities have banded together to try and go 100% renewable by 2050. This could very well tip the dominos in favor of a more electrified grid.

Those who are rallying for the integrity of the natural gas industry – the suppliers and drillers – are fighting back against any bans. After all, natural gas usage has helped the recent coal phaseout in the Texas and abroad, but there’s a caveat, as Daniel Cohan of The Hill points out: natural gas means methane, which isroughly 30 times as potent as carbon dioxide.” Sure, coal has fallen, but with it comes higher methane levels – often a result of natural gas ‘flaring’.

Again, all of this leads back to the central question: 

Does it make sense to keep investing in natural gas for the long term, or is it a good idea to instead invest in a more electrified country? 

Right now seems to be a crucial transitionary period for more electrical connectivity, versus the traditional fossil fuel route of old.

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.

 

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