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What are the Most Important U.S. Power Sector Trends?

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In many ways,  a trend that has defined the last decade of U.S. power generation is continuing into 2020: decarbonization of the power grid.

From the downfall of coal and the rise of renewables to flattening electricity demand, there is increased and undeniable attention toward lower and zero-carbon futures for power. 

Tune into the insights from Direct Energy Business president John Schultz as he reflects on power market changes over the last year. 



Decarbonizing the U.S. Electricity Grid

Over the past decade, the United States has made significant strides in decarbonizing the nation’s power generation fleet. In fact, in April 2019, the U.S. generated more electricity from renewable sources than coal for the first time ever.

“If you look over the last decade, we’ve retired 550 coal plants in this country – almost 100,000 megawatts of installed coal capacity,” Schultz remarks. “That’s 40 percent of the entire coal fleet that’s disappeared over the last decade.” 

While natural gas has and will continue to play an important role in replacing coal in U.S. power generation, the U.S. Energy Information Administration (EIA) projects that renewable energy will be the fastest growing source of electricity. Natural gas-fired electricity generation grew by six percent in 2019 and will grow by two percent in 2020. One particular renewable resource, wind generation, will grow even faster: six percent in 2019 and a whopping 14 percent in 2020. 

By contrast, coal-fired generation is expected to continue on a downward spiral: it fell 15 percent in 2019 and is projected to fall another nine percent in 2020. That shift marks a dramatic turning point in U.S. power generation – one that illustrates the downfall of coal and rise of renewable energy, which has been largely fueled by growing concerns over climate change, supporting policies and regulation, increasing corporate commitments and, very importantly, declining costs.  


Cleaner and Cheaper Electricity

What does increased renewable and natural gas-fired power generation mean for energy consumers? On average, it has led to cleaner energy and lower electricity prices for many homes and businesses across the country.   

“The wholesale price of electricity in the five largest cities in the United States is about three cents per kilowatt-hour,” notes Schultz. “As we look into the future, we see that trend continuing.” 

Beyond added renewable- and natural gas-fired generation, milder summer temperatures and advances in energy efficiency helped ensure that U.S. electricity prices remained relatively low in 2019. In fact, average residential electricity consumption was expected to be down five percent from 2018 and the lowest its been in five years. 

Stay tuned to the Direct Energy Business Blog as we unpack more industry trends to watch for in 2020. Can't wait for more? Check out Schultz's insights on the unprecedented growth in U.S. natural gas production and exports in 2019.   

Posted: January 23, 2020