The U.S. power generation mix could go a little topsy turvy in 2021, with natural gas-fired declining and sending coal-fired generation on a rare ascendancy. Renewables, though will keep pushing upward like they have for a decade.
Higher natural gas prices could push generation from gas-fired power plants down by 8 percent this year, according to a new report by the federal Energy Information Administration. This would be the first decline for gas-fired generation in four years, the EIA says.
Forecast generation from coal-fired power plants, however, will increase by 14 percent in 2021. This is starting from a lower point, admittedly, as coal-fired generation has losing its position in the U.S. mix for more than a decade and dropped 20 percent in 2020, according to the federal data.
The EIA’s short term energy outlook and predictions do favor the sustained growth of non-hydro renewables such as wind and solar. Those resources for generation will increase 18 percent this year, according to the EIA.
The shift from coal to natural gas was driven primarily by the sustained low natural gas price. In 2020, natural gas prices were the lowest in decades: the nominal price of natural gas delivered to electric generators averaged $2.37 per million British thermal units (Btu).
For 2021, EIA forecasts the average nominal price of natural gas for power generation will rise by 41 percent to an average of $3.35 per million Btu, about where it was in 2017. In contrast, EIA expects nominal coal prices will rise just 6% in 2021.
EIA expects about 36 percent of total U.S. electricity generation in 2021 will be fueled by natural gas, down from 39 percent in 2020. The forecast coal-fired generation share in 2021 rises to 22 percent from 20 percent last year. However, these forecast generation shares are still different from 2017, when natural gas and coal each fueled 31 percent of total U.S. electricity generation.
Significant growth in electricity-generating capacity from renewable energy sources in 2021 is also likely to affect the mix of fuels used for power generation. Power developers are scheduled to add 15.4 GW of new utility-scale solar capacity this year, which would be a record high. An additional 12.2 GW of wind capacity is scheduled to come online in 2021, following 21 GW of wind capacity that was added last year.
Much of this new renewable generating capacity will be located in areas that have relied on natural gas as a primary fuel for power generation in recent years, such as in Texas.