EIA: Natural Gas to be Number One Power Generation Source in 2016

Natural gas is expected to become the most widely used fuel for electricity generation in 2016, according to the U.S. Energy Information Administration’s (EIA) short-term market forecast released this week. As EIA explains, natural gas will provide 33 percent of generation in 2016 while coal’s share will likely fall to 32 percent. Natural gas has been the number one source on a monthly basis previously, but this would be the first time in modern history that natural gas has overtaken coal on an annual basis.

From EIA’s outlook:

EIA’s Short-Term Energy Outlook (STEO) is now forecasting that 2016 will be the first year that natural gas-fired generation exceeds coal generation in the United States on an annual basis. Natural gas generation first surpassed coal generation on a monthly basis in April 2015, and the generation shares for coal and natural gas were nearly identical in 2015, each providing about one-third of all electricity generation.

Nat gas

EIA also predicts that nonhydro renewables (wind, solar) will increase to 8 percent in 2016 and hydropower at 6 percent.

What’s also particularly interesting about EIA’s analysis is that the growth of natural gas-fired generation has been driven by current market conditions while the increased use of nonhydro renewables has been pushed along by state and federal government policies. As EIA puts it,

“Unlike the growth of natural gas-fired generation, which has largely been market-driven, increased use of nonhydro renewables has largely been driven by a combination of state and federal policies.”

Renewable power sources have undoubtedly increased in conjunction with natural gas but as reported here before, natural gas has played a big role in the growth of renewable energy because it can provide the needed baseload power when the sun doesn’t shine or the wind doesn’t blow.

Thanks to hydraulic fracturing, we have achieved what was inconceivable a decade ago. Led by innovators and pioneers across the country, the domestic shale revolution has unleashed vast reserves of cheap, cleaner burning natural gas to power the grid and support the growth of renewables – which is by all counts a win-win.

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