US Demand for Electricity Declined in 2019 & Stagnated for a Decade, but 2020 Capacity Additions Are Wild
Where the heck are the EVs when you need them?
By Wolf Richter for WOLF STREET.
Electricity sales in the US isn’t exactly a high-growth business. In 2019, total electricity sales (in gigawatt hours) to ultimate customers are estimated to have fallen; through the first 10 months, according to the EIA’s latest Electricity Monthly, total electricity sales declined 2.9% from the same period in 2018. The only sector to which electricity sales increased – and just by 0.6% – was transportation, a tiny sector covering subways and other electric mass-transit systems. Sales to the other sectors fell, in order of magnitude of the sector: residential (-2.4%), commercial (-2.0%), and industrial (-4.8%).
In terms of annual sales of electricity to ultimate customers from 2008 through 2019, an image of stagnation emerges. Based on the full-year 2019 estimate, electricity sales in gigawatt hours over the 11 years from 2008 through 2019 ticked up only 0.6%, interrupted by some bigger increases and declines in between.
Stagnating electricity sales over the span of a decade, despite population growth and economic growth, is a function of many factors, ranging from higher efficiencies – for example, in the residential sector, LED light bulbs and more efficient HVAC equipment and appliances – to sending more manufacturing offshore, such as auto production. For example, new-vehicle imports from Mexico have nearly doubled since 2011.
Generating capacity additions in 2020 shift to wind & solar.
In total, 42 gigawatts (GW) of capacity via new power plants and small-scale installations (such as rooftop solar) will be added in 2020, and 11 GW of mostly old inefficient powerplants will be retired, for a net addition of 31 GW in capacity, according to the EIA’s generator survey, which provides estimates by power plant developers and owners about the capacity they’re planning to add or retire.
And of those 42 GW of capacity additions, 32 GW (76%) will be wind and solar (utility-scale and rooftop solar) – breaking all records.
This is particularly interesting when we look at US electric generation by source, which in 2018, came mostly from these four sources (not including rooftop solar):
- Natural Gas: 35.2%
- Coal: 27.5%
- Nuclear: 19.4%
- Renewables: 16.9%
- Hydro: 7.0%
- Wind: 6.5%
- Solar (does not include rooftop solar): 1.5%
- Biomass: 1.4%
- Geothermal: 0.4%
In addition, the EIA estimates that about 0.7% (or 30 gigawatt hours) of total generation in 2018 came from rooftop solar systems, which would bring the share of solar to about 2.2% in 2018 and the share of renewables to about 17.5% of total generation.
The grid is designed so that its capacity can handle the largest loads during peak times. In Texas, that peak load period might be mid-afternoon on some day in early August. But in the middle of the night in late fall, most of that capacity – the huge amount of capital investment – sits idle, not generating revenues. Balancing out the energy portfolio and getting it ready for future demand for each region is a constant effort by the industry, including developers and owners of power plants. So here is what’s cooking for 2020.
Capacity additions in 2020.
Of the 42 GW of new capacity that the EIA expects to start commercial operations in 2020, wind accounts for 44%; solar for 32%; and natural gas for 22%. The remaining 2% of the additions will come from hydropower and battery storage. There are no coal-fired power plants scheduled to start commercial operations this year. But the capacity additions of wind and solar are breaking all records (chart via EIA):
Texas is the biggie: Over half of the wind power additions in 2020 are in five states: Texas accounts for 32% (Texas rancher: “What, they’ll pay me for wind?”); Oklahoma for 6%; Wyoming for 5%; Colorado for 5%; and Missouri for 5%.
Nearly 60% of the record additions of utility-scale solar capacity are in four states: Texas accounts for 22%, California for 15%, Florida for 11%, and South Carolina for 10%.
In terms of residential and commercial rooftop solar, the EIA expects a record 5.1 gigawatts of capacity additions to enter service this year.
Part of the reason for the record addition of wind and solar power capacity is the phase-out of tax credits at the end of 2020. From then forward, wind and solar will have to stand on their own two feet. As equipment costs have plunged over the years — and the “fuel” is always free — this is already happening around the world. But in 2020, the US industry is still scrambling to benefit from the tax credits.
Of the 9.3 GW in natural-gas power plants to start operating in 2020, over 70% are in Pennsylvania, Texas, California, and Louisiana.
This map from the EIA shows where those capacity additions will take place, with wind power additions concentrated in the middle of the country:
Capacity retirements in 2020:
Of the 11 GW in scheduled capacity retirements in 2020, coal power plants will account for 51%, natural gas power plants for 33%, and nuclear power plants for 14%:
Of the 5.8 GW in coal power plants to be retired, half will be in Kentucky and Ohio.
Of the 3.7 GW in natural gas power plants to be retired, 60% will be in California, mostly plants built in the 50s and 60s. But interestingly, the Inland Empire Energy Center, an efficient, modern (10 years old) combined-cycle plant with a capacity of 0.7 GW will also be retired because it has been operating under capacity for years.
Two nuclear plants will be retired, the Indian Point Unit 2 in New York in April and the Duane Arnold Energy Center in Iowa in December.
This map from the EIA shows that the electric capacity retirements in 2020 are heavily concentrated in just a few places:
Given the long-term stagnation of electricity sales, and the continued increase in capacity and capital expenditures, utilities have been hoping for years that the mass-arrival of EVs would boost electricity sales in the residential segment, as EV owners would begin utilizing the enormous and costly idle capacity in the middle of the night to charge up their EVs in their garages. But this hoped-for growth in revenues from the arrival of EVs, and the increased capacity utilization at night they’d bring, has been, for utilities, frustratingly slow in coming.
The Dallas Fed’s Fourth Quarter Energy Survey portrays an oil-and-gas industry in distress. Read… Dallas Fed Outlines Somber Oil & Gas Industry, “Flaring” of Natural Gas Comes into Focus
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