The United States Energy Information Administration (EIA) has a difficult task. Every year, they release a report that includes several use cases. They use these use cases to then come up with a few predictions about energy for the upcoming year and beyond. For example, the EIA has recently released a 2017 Energy Outlook Report that predicts what the energy industry might look like in 2050.
It’s important to note that these predictions are far from being set it stone. Their purpose is to simply help the general public to better understand what might happen in the year ahead. They also help people understand what changes they can expect to see in the years to come.
Since the EIA has a recently released outlook report, we thought it would be beneficial to further explore their predictions for the future of electricity in the United States. After all, it’s always good to be aware of the changes (and in some cases, what will remain the same) within the electricity industry.
Before we dive into the EIA predictions, it might help to take a look at the things that currently have an impact on the energy industry. Examples of impacts include new regulations or laws, existing regulations or laws, changing market conditions and previous improvements. These types of impacts often make it a little more difficult for the EIA to predict outcomes because they don’t have enough data yet.
In the 2017 report, impacts that directly effect the electricity market pertain to an existing law. This law includes:
State Law SB-32 in California: This law was passed last year. It has an impact on the state’s current energy structures and systems. The reason for this is because by 2030, greenhouse gas emissions must be 40% below the 1990 level. The EIA believes this law will primarily affect electricity and transportation. They also believe that the law will have an impact on other areas within the United States due to the large energy market in California.
Predictions on Electricity Demand and Generation
Despite the unknown impacts, the EIA can still make a few predictions about electricity’s future across America. Again, the following information is simply based on educated guesses. Electricity is a constantly changing market, which means that while the EIA can make an informed guess today, by 2020, the market might look a little different.
Overall, there are three major electricity related predictions. These include:
Weakening demand for Crude Oil Imports: This is a continuing trend from 2016. The EIA estimates that the Lower 48 onshore tight oil will be responsible for approximately 60% of the United State’s total domestic production. The lower 48 onshore tight oil is currently the primary source of crude oil production in the nation.
Increase in Renewable Generation: The EIA estimates that there will be a significant increase in the amount of electricity generated by renewable resources like solar and wind. This prediction is based on the fact that the current Clean Power Plan (put into place by the Obama administration) contains many policies. These policies require power plants and other organizations to reduce carbon emissions generated by fossil fuels and outdated equipment. These policies also encourage these organizations to increase development of renewable resource generation. The plan includes several tax credits to help offset the costs required to make this shift. Therefore, the EIA predicts that the implementation of renewable resource generation systems today, will only continue in the future.
Demand for Solar Power: Over the last few years, development of solar power technologies has caused the cost of setup to significantly decrease. Solar’s electricity output is also the highest during periods of high demand. Due to these facts, the EIA predicts that solar power across the United States will continue to grow.
Areas for Improvement
In addition to predictions, the EIA report also indicated areas of improvement within the electricity markets in the United States. The reason why the EIA highlights these areas for improvement is because there are other areas within the electricity market that also need improvement. Examples include:
The Grid: This work is very important because it impacts the way energy is (and can be) stored in the United States. The EIA suggests that the nation needs to work towards better, “Representation of energy storage to accommodate multiple grid services including spinning reserve and renewables integration.”
The Structure of Utility Rates: Based on EIA’s prediction that solar power generation will see significant growth into 2050, the utility rate structure might need a few tweaks. It will be important to try and figure out the, “impact of high levels of distributed photovoltaic generation on utility rate structure”.
The Retirement of Generators: The older generators get, the less effective and clean they become. Therefore, the EIA suggests organizations evaluate existing generators to determine whether or not they should be replaced. In addition, the EIA recommends that a general lifespan for all generators be used in order to better determine which ones should be replaced.
The Generation of Electricity: Renewable energy electricity generation will need to be evaluated for areas of improvement like, transmission. The EIA feels that this will become important due to events that cause increased or surges of wind and solar power generation.
Electricity in the Future
Overall, the EIA determined several factors that will have the greatest impact on the future of electricity in America. These factors include:
- Decreased use in inefficient fossil fuel energy generating technologies.
- Increase in renewable energy technologies thanks to Clean Power Plan policies and tax credits.
- Should the Clean Power Plan discontinue, renewable energy generation and natural gas generation will continue to grow because of low rates.
- The “generation mix” will depend on two factors: price of natural gas in addition to electricity demand.
Throughout 2017, the EIA will continue to update their report based on actual electricity market events. Their aim is to provide an accurate picture of what will happen. These events will also help the administration to better predict the future of electricity in the United States.