Renewables make up the lion's share of new electric generation, federal agency finds

Rising US demand for electricity is being met almost entirely by renewables, a new federal report has found.

The new numbers from the U.S. Energy Information Administration (EIA) suggest that the U.S. isn't moving fast enough to reach the Biden administration's climate targets.

It also cast doubt on a key rationale for a proposed national buildout in gas power plants — and gas exports.

The EIA numbers showed that rising gas exports are increasing the amount of money households pay for electricity — even as the agency found that the relative importance of gas to the power sector is falling.

The federal projections of electric growth largely powered by renewables contradict recent arguments that only a buildout of gas infrastructure can protect the nation's grid from skyrocketing demand.

Earlier this week, CNBC carried a report by Wells Fargo that found electricity demand would shoot up 20 percent by 2030 — driven largely by the push to build new data centers for artificial intelligence.

The fossil fuel industry this week seized on those numbers to argue that only natural gas can reliably meet the rising demand — and that new gas plants must be built quickly. (Goldman Sachs has argued that as much as 60 percent of new AI demand will be powered by gas.)

The recent EIA projections of rising electric demand roughly tracked with those of the banks — but suggested that renewables are so far the lion’s share of new capacity.

“In 2025, we expect generation from solar to exceed the contribution from hydroelectricity for the first year in history,” EIA Administrator Joe DeCarolis said in a statement.

According to the agency, total U.S. power generation is expected to grow 3 percent in 2024 — which if it holds would represent a roughly 15 percent rise by 2030. That increase is equivalent to about 13 gigawatts, or enough electricity to power a little under 10 million homes.

But the agency found that about 92 percent of that new generation is coming from wind, hydropower and, above all, large-scale solar.

Solar alone accounted for 60 percent of that growth, followed by wind (19 percent) and hydropower (13 percent).

The EIA projects that the amount of electricity provided by solar will rise 41 percent in 2024 over its levels in 2023. By 2025, the EIA expects that solar will provide more energy to the grid than hydropower for the first time in history. 

The rise in solar is almost seven times the relative rise in hydropower (6 percent) and more than eight times wind (5 percent) between 2023 and 2024.

Meanwhile, the share of both coal and natural gas in the nation's grid is projected to slowly decrease, according to EIA.

The amount of coal burned this year to make electricity is expected to fall by 4.2 percent — and another 7.2 percent next year.

The picture for natural gas is more complicated, but also points toward a market in decline. 

The amount of gas burned by the power sector grew by more than 7 percent last year. 

But this year's rise is expected to be just 1.5 — and the amount of gas used by the power sector is expected to fall next year by 0.5 percent.

Overall, the report represents movement in the right direction for the campaign to cut back the role that domestic U.S. energy use plays in heating the planet.

Even as energy production rises, the amount of planet-heating carbon dioxide released in the U.S. by the burning of fossil fuels is slowly but steadily dropping.

It fell by nearly 3 percent last year, and is expected to drop by 0.2 percent this year and 0.5 percent next year. 

But this isn’t fast enough to meet U.S. — or global — climate goals. The U.S. remains far from the pace needed to reach its goal of cutting greenhouse gas emissions by two-thirds by 2030 — let alone the goal of consistent 5 percent to 10 percent annual cuts the Biden administration wants the nation to hit starting next decade.

The incremental growth of solar and wind in the U.S. is also far from the levels that the National Academies of Science, Engineering and Medicine have projected necessary to head off dangerous warming.

That tracks with the broader picture around the world. A December report by the Global Carbon Project found that despite record installations of renewable energy, carbon emissions would rise 1 percent in 2023 — at a time that they need to fall rapidly.

“Renewables are growing to record levels, but fossil fuels also keep growing to record highs,” Glen Peters, a senior researcher at the Cicero Center for International Climate Research, said in a statement last December.

To lead the globe, the U.S. needs to accelerate renewable installations. To be on track to zero out greenhouse gas emissions by midcentury, the National Academies projected that the US needs to have a power sector that is 75 percent fossil fuel-free by 2030.

By the end of 2025, if the EIA projections hold, the US will be at just 44 percent renewables.

Closing that gap would require the U.S. to generate — and connect — an additional 1200 gigawatt-hours of zero-emission sources by the end of the decade. 

That is the approximate equivalent of adding the current nuclear fleet every year till the end of the decade — or a 30 percent annual rise in wind and solar.

U.S. climate progress is also offset by the extent to which the U.S. is exporting its contribution to climate change abroad. The EIA found that U.S. coal exports are up 4.5 percent this year, even as domestic use and production fall.

That’s less than the agency had initially expected — but the collapse of the Francis Scott Key Bridge in Baltimore is bottlenecking exports.

DeCarolis told reporters last month that he expected coal exports “to recover toward the end of the summer or early fall,” but said that there “was significant uncertainty” as to when the port could reopen, or whether shippers could get supplies to alternate ports.

Meanwhile, natural gas exports to foreign markets are projected to rise 3 percent this year and 11 percent next year — a rise that correlates with the completion of new export facilities.

The EIA data also shows that those rising levels of gas exports are correlated, as well, to rising consumer energy prices in the U.S. 

During the same period, the price of gas born by households has risen by 52 percent, according to EIA data. 

The share of gas alone and consumer electricity is 17 percent higher than before the export boom began, according to EIA.

After a long fall, the agency expects the cost of gas to the power sector to rise by a quarter next year — nudging up total consumer electricity prices by a little under 2 percent.

"The U.S. is exporting more and more natural gas, and importing higher prices as a result," Clark Williams-Derry of the Institute for Energy Economics and Financial Analysis wrote in an analysis.