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U.S. power generation 2022: Will gas or renewables rule?

Britt Burt
Britt Burt
Vice President of Global Research, Power Industry at Industrial Info Resources (IIR)

Power generation in the United States is greener and more reliant on gas than ever before, but what will the fuel mix look like in 2022? IIR Energy’s Britt Burt analyzes the data.

  1. Nearly one-third of power generation in the United States is currently coal-fired, closely followed by gas.
  2. By 2022, gas should add two points of market share; renewables five percentage points.
  3. IIR Energy Power Outages App on Eikon has forward outlooks of all thermal generation.

The power and electricity segment of United States is going through a period of rapid change.

Not only is technology driving a transformation across power generation to consumption, policies and politics are having an equal say in deciding the future direction.

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Over the last decade, more than 50,000 megawatts (MW) of coal-fired generation have been retired.

Most of these units are relatively old (built before 1960) or small (less than 300 MW of generating capacity). In addition, tens of thousands of megawatts of other coal-fired generation plants have been converted to burn natural gas.

Shale revolution

As of 2017, nearly one-third of all power generation in the U.S. was from coal-fired power stations.

However, this number is expected to fall over the coming years with advancements in the renewables sector picking up speed. Also, natural gas is set to continue the upward trend in the overall fuel mix.

The shale revolution, propelled by hydraulic fracturing and horizontal drilling, has led to the extraction of record volumes of natural gas from unconventional formations that were previously thought to be uneconomic.

As a result, gas prices for electric generators are about one-third of what they were 10 years ago, which has helped gas win market share from coal.

The actual (2017) and projected (2022) US Electric Fuel Mix
Data: EIA annual energy outlook 2018 Feb 2018 release)

Cost-effective power generation

Technological advances have also made wind and solar power more cost effective.

Wind costs have declined by more than two-thirds over the last decade. Solar has also declined, though it is earlier in its cost-reduction journey than wind.

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Over the next five years, as coal and nuclear become less attractive fuel options, we predict the “dash to gas” and the “rush to renewables” will become an outright stampede.

Gas-fired generation is expected to add about two points of market share while renewables’ share of the fuel mix will rise by about five percentage points.

Britt Burt Quote

Electricity storage projects

If electricity storage projects can be deployed at scale over the next five years, renewables’ share of the U.S. electricity mix is expected to gain even more market share, most likely at the expense of coal and nuclear.

Cost-effective electricity storage could be the answer to the age-old rhetorical question about renewables: “What happens when the sun doesn’t shine and the wind doesn’t blow?”

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The IIR Energy Power Outages App on Eikon delivers accurate forward outlooks of all thermal generation by system operators.

This is supported by our U.S. Power App that provides unrivaled speed on translating raw weather data to forecast energy output from renewable generation.

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