How the Power Sector Has Changed Since 2001
A new report from the Government Accountability Office (GAO) reveals surprising aspects about how federal subsidies for electricity have been distributed, how the power generation mix has shifted, and how consumption has transformed since 2001.
The June 29-released report, "Generation Mix has Shifted, and Growth in Consumption has Slowed, Affecting System Operations and Prices," responds to requests for information about changes in the power sector by four Republicans: Rep. Lamar Smith (R- Rep.), who chairs the House Committee on Science, Space, and Technology, Rep. Gary Palmer (R-Ala.), Rep. Cynthia Lummis (R-Wyo.), and Sen. Jefferson Sessions (R-Ala.).
Among its significant findings is that the wind and solar production tax credit and investment tax credit resulted in almost $12 billion in revenue losses for the federal government between fiscal year 2004 and 2013. A related payment program provided almost $17 billion in outlays during the same period. By the year 2013, wind, solar, and other renewables accounted for about 72% of all electricity-related direct federal financial interventions and subsidies in fiscal year 2013, the report says, citing the Energy Information Administration (EIA).
Between 2001 and 2013, the nation's power generation mix shifted to include much more natural gas, wind, and solar, but less coal and nuclear, it says. All U.S. regions, with the exception of Alaska, saw increases in natural gas generation over that period, and in some regions, natural gas became an increasingly significant energy source. In New England, for example, natural gas increased from 31% of the region's electricity generation in 2001 to 42% in 2013.
Wind generating capacity increased over the period about 16-fold, with 57 GW added through 2013 (though wind's share of total generating capacity increased from just over 0% in 2001 to 5.4% in 2013). Solar grew 18-fold through 2013. In 2014, 3 GW of new solar was added, so that total solar generating capacity in the U.S. for the first time exceeded 10 GW.
One interesting takeaway is that data on solar generating capacity and actual generation do not include distributed solar installations. Data from the Solar Energy Industries Association shows that distributed solar installations reached 8.5 GW at the end of 2014-compared to about 10 GW that was installed at larger solar power plants.
By 2025, the nation's capacity mix will see even starker changes. No coal capacity is under construction, but 29 GW is slated to retire. About 6 GW of nuclear is under construction, but 15 GW is planned for retirement.
Finally, continuing a long-term trend, growth in electricity consumption has slowed from 2001 through 2014. EIA data on annual national electricity retail sales shows that the rate of growth of electricity consumption has slowed in each decade since the 1950s, when it was 9% per year, to more than 2% per year in the 1980s and 1990s. In the 2000s, electricity retail sales grew by more than 1% per year from 2001 through 2007, but has remained relatively flat from that time through 2014.
Consumers have also changed. Industrial electricity consumption decreased by 4% over the period while residential electricity consumption increased 17% and commercial consumption increased 25%. Changes in consumption are linked to changes in the economy, efficiency improvements, changes in the uses of power, demand-response activities, and distributed generation.
Meanwhile, electricity prices have also changed-though how the changes in generation and consumption have influenced consumer electricity prices is complex, the report says. National average real consumer electricity prices were nearly 11% higher in 2014 than in 2001, and they varied by consumer type and by region.
The report also suggests that wholesale electricity prices and natural gas prices have tended to move in tandem; negative prices occurred on average 0.7% of the time from 2005 through 2014; and the effect of retirements on prices may vary.
-Sonal Patel, associate editor(@POWERmagazine, @sonalcpatel)
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