Rising Renewables to See the US Cut Back on Conventional Power in 2023-24

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The Energy Information Administration (EIA) has forecasted an increase in U.S. power generation from new renewable sources, primarily wind and solar, which would cut down on generation from coal-fired and natural gas-fired power plants in 2023 and 2024.

EIA said solar capacity expansion is consistent with its declining construction cost and favorable tax credits announced in the Inflation Reduction Act.

This decline in fossil fuel-based power generation reflects the retirement of almost 10 GW of coal-fired capacity in 2023 and another 4 GW in 2024. At the same time, renewable generation will increase by 20% between 2022 and 2024, reducing coal-fired generation.

The projected solar capacity expansion by the end of 2024 is 63 GW, up 84% from 74 GW at the end of 2022. The forecasted growth in wind power capacity is 12 GW over the next two years.

With these new projects coming online, EIA anticipates that solar and wind will make up 16% of total generation in 2023, up from 14% from the previous year and 8% in 2018.

US Electricity Generation by Energy Source (2018 -2024)

Power generators are planning to add 32 GW of utility-scale solar capacity in 2023 and 2024.

EIA forecasts that small-scale solar capacity will grow by 9 GW in 2023 and 12 GW in 2024. Wind capacity will increase by 6 GW in both 2023 and 2024. Battery storage additions to capacity in EIA’s forecast are 10 GW in 2023 and 9 GW in 2024.

This growth in solar and wind capacity is primarily in Texas and California, where natural gas has been the primary source of electricity, resulting in a decline in natural gas generation from 39% in 2022 to 37% in 2024.

In contrast, the proportion of electricity generated by natural gas is expected to decrease from 39% in 2022 to 38% in 2023 and 37% in 2024.

Similarly, the share of electricity generated by coal is predicted to drop from 20% in 2022 to 18% in 2023 and 17% in 2024.

In terms of electricity generation, U.S. generation is expected to follow consumption, declining in 2023 and then rising in 2024. Generation from renewable sources is the main contributor to growth in U.S. electricity generation.

The forecast share of U.S. renewables generation rises from 21% in 2022 to 24% in 2023 and 26% in 2024. About two-thirds of this forecast increase in renewables comes from new utility-scale solar capacity, and most of the rest is from new wind projects.

In terms of coal markets, after increasing in both 2021 and 2022, EIA expects U.S. coal production to decline by 11% to about 530 million short tons (MMst) in 2023 and a further 6% to 500 MMst in 2024.

The primary reason for the decrease is EIA’s forecast of an 11% reduction in coal consumption in the electric power sector in 2023, followed by a 3% reduction in 2024.

In December, EIA said that project developers and owners in the U.S. would add up to 30 GW of utility-scale battery storage capacity until 2025.

The United States needs to deploy 40-90 GW of solar and 70-150 GW of wind energy annually until 2030 to decarbonize the country’s power sector by 2035.