Wednesday, August 22, 2012

Fossil Fuels Generation Market Share Declines From 82% to 68% In 42 Years

Coal, oil, gas--our fossil fuels--have been the backbone of the electric generation industry for decades.  And they remain dominant today, providing about 68% of our electric power, but times are changing.

The rise of nuclear power and renewable energy means that America has been slowly decreasing the share of electric generation coming from fossil fuels, during the last 42 years.  In 1970, fossil fuels generated 82% of our electricity.

The decline in the electricity generation market share of all fossil fuels conceals very different trends for coal, gas, and oil.  Indeed, the changes in market shares within fossil fuels is probably more important than the slow decline in the combined market share of all fossil fuels.

After supplying a bit more than 20% of America's electricity during the 1970s, oil has almost been eliminated as an electric generation fuel today.  It now provides 1% or less of our power.

As for coal, it generated 52% of our electricity in 2000, 48% in 2008, 42% in 2011, and is projected to generate about 37% this year.

While coal and oil have dropped significantly, natural gas has steadily increased the amount of electric generation it supplies.  In 1990, natural gas provided 12% of America's power, then 16% in 2000, and this year it has been above 30%.

The rise of gas did not come at the expense of nuclear or renewables.  Instead gas has been competing with coal and oil for electric generation market share.  Renewable energy now typically provides 13% or more of the nation's electric supply, and booming wind and solar generation are adding to the renewable energy market share.

The trend toward more gas and renewables in the US generation mix, with nuclear maintaining or slightly decreasing its market share, looks firm. The result of all those changing market shares will be a continuing slow decline in the electricity generation market share of all fossil fuels combined, but fossil fuels will provide 60% or more of America's total power for years ahead.

Finally, it is important to remember that the amount of electricity consumed is rising, going up more slowly than in the past, but still increasing approximately 1% per year nationally.  The electric generation market is growing.  A growing market means that fossil fuels can lose market share without reducing total combined production.

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