Coal, Renewables

U.S. agency raises long-term electricity demand projection

Dec. 22, 2000—U.S. government forecasters Thursday raised long-term projections for electricity demand to 1.8%/year between 1999-2020, up from 1.3% for the same period in a year-ago forecast.

The U.S. Energy Information Administration (EIA) said higher demand will result from higher projected economic growth and a reevaluation of the potential for growth in electricity use in residential and commercial appliances and equipment, including personal computers.

The projected growth rate of the U.S. economy was raised to 3%/year during the same time period, up from a projected 2.1%/year growth projected in the 2000 outlook. With a growing economy, the U.S. total energy demand is expected to increase to 127 quadrillion btu from 96.1 quadrillion btu between 1999-2020. The forecast is about 6 quadrillion btu higher than projected last year, primarily because of higher projected economic growth.

The federal agency said the projection assumes a 10-year transition to full competitive pricing of electricity in California, New York, New England, the Mid-Atlantic states, Illinois, Texas, Oklahoma, Michigan, Ohio, Arizona, New Mexico, and West Virginia. Other states are assumed to continue cost-of-service electricity pricing.

Average electricity prices are projected generally to decline from 6.7 cents/kWh in 1999 to 6 cents/kWh in 2020, slightly higher than 5.9 cents/kWh, the EIA forecast last year. The agency attributed the increase to rising natural gas prices.

Electricity industry restructuring is expected to contribute to lower prices through reductions in operating and maintenance, administrative, and other costs, EIA said.

Electricity generation fueled by natural gas and coal is projected to increase through 2020 to meet growing demand for electricity and offset the projected retirement of existing nuclear units. The share of natural gas generation is projected to increase to 36% in 2020 from 16% in 1999, and the coal share is projected to decline 50 44% from 51% because electricity industry restructuring favors the less capital intensive and more efficient natural gas generation technologies, according to the forecast.

Higher gas use
Natural gas demand is projected to grow by 2.3%/year to 34.7 tcf in 2020, 3.2 tcf higher projected a year ago, mainly as a result of higher projected demand for natural gas in the electricity generation sector. The agency raised its projections of gas prices to $3.30/Mcf in 2020 from $3.13/Mcf projected last year due to higher demand. But it said price increases should be slowed by technological improvements in natural gas exploration and production.

The EIA also boosted its projections for coal consumption due to higher projected demand for industrial uses and for electricity generation, which constitutes 90% of coal demand. It projected coal demand to increase to 1,297 million tons in 2020, an average increase of 1.1%/year, up 18 million tons from the earlier forecast.

In 2020, EIA forecasters expect 55% of renewable energy will be used for electricity generation and the rest for dispersed heating and cooling, industrial uses, and fuel blending. This year’s forecast for renewable energy demand in 2020 is 0.4 quadrillion btu higher than last year, mainly due to higher projected use of biomass in the industrial sector.