Electricity Generation  

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Total electricity consumption, including both purchases from electric power producers and on-site generation, grows from 3,814 billion kilowatthours in 2006 to 4,972 billion kilowatthours in 2030, increasing at an average annual rate of 1.1 percent in the AEO2008 reference case. In comparison, electricity consumption grew by annual rates of 4.2 percent, 2.6 percent, and 2.3 percent in the 1970s, 1980s, and 1990s, respectively. The growth rate in the AEO2008 projection is lower than in the AEO2007 reference case (1.5 percent per year). The reduced rate of growth in AEO2008 results from slower economic growth, the imposition of new efficiency standards in EISA2007, and higher electricity prices.

In the AEO2008 reference case, electricity generation from natural-gas-fired power plants increases sharply from 2006 to 2008 and then remains relatively stable for the next decade, growing by 3 percent from 2008 to 2016—less rapidly than in the AEO2007 reference case. After 2016, however, generation from new coal, nuclear, and renewable plants displaces some natural-gas-fired generation (Figure 7). In the AEO2008 reference case, 741 billion kilowatthours of electricity is generated from natural gas in 2030, 21 percent less than the 937 billion kilowatthours in 2030 in the AEO2007 reference case.

In the AEO2008 reference case, the natural gas share of electricity generation (including generation in the end-use sectors) remains between 20 percent and 21 percent through 2017 before falling to 14 percent in 2030. The coal share remains between 48 percent and 49 percent from 2006 through 2018 before increasing to 54 percent in 2030. Additions to coal-fired generating capacity in the AEO2008 reference case total 104 gigawatts from 2006 to 2030 (as compared with 151 gigawatts in the AEO2007 reference case), including 4 gigawatts at CTL plants and 29 gigawatts at integrated gasification combined-cycle plants. Given the assumed continuation of current energy and environmental policies in the reference case, carbon capture and sequestration (CCS) technology does not come into use during the projection period.

Nuclear generating capacity in the AEO2008 reference case increases from 100.2 gigawatts in 2006 to 114.9 gigawatts in 2030. The increase includes 17 gigawatts of capacity at newly built nuclear power plants (33 percent more than in the AEO2007 reference case) and 2.7 gigawatts expected from uprates of existing plants, partially offset by 4.5 gigawatts of retirements.

Rules issued by the Internal Revenue Service in 2006 for the Energy Policy Act of 2005 (EPACT2005) production tax credit for new nuclear plants allow the credits to be shared out on a prorated basis to more than 6 gigawatts of new capacity. In the AEO2008 reference case the credits are shared out to 8 gigawatts of new nuclear capacity, and another 9 gigawatts of capacity is built without credits.

Total electricity generation from nuclear power plants grows from 787 billion kilowatthours in 2006 to 917 billion kilowatthours in 2030 in the AEO2008 reference case, accounting for about 18 percent of total generation in 2030. Additional nuclear capacity is built in some of the alternative AEO2008 cases, particularly those that project higher demand for electricity or higher fossil fuel prices.

The use of renewable technologies for electricity generation is stimulated by improved technology, higher fossil fuel prices, and short-term extensions of the EPACT2005 tax credits. The reference case also includes State RPS programs for which legislation is in place. Total renewable generation in the AEO2008 reference case, including combined heat and power (CHP) and end-use generation, grows by 2.2 percent per year, from 385 billion kilowatthours in 2006 to 656 billion kilowatthours in 2030. The projection for renewable generation in the AEO2008 reference case, which includes State and regional programs, is significantly higher than the AEO2007 projection.