Generating electricity from natural gas had been growing slowly from 1990 to 2007. The low capital costs of a natural gas plant were a big draw, though gas prices swung from low to high.
After gas prices peaked in July 2008 at $13 per thousand cubic feet, and then plummeted from that peak, natural gas generation jumped, increasing 25% and 300 billion kilowatt-hours from 2007-2012.
Natural gas has been steadily raising its share of America's electricity production from 12% in 1990, to 16% in 2000, to 30% in 2012.
The gains for natural gas created pain for coal whose market share declined from 48% in 2008 to 37% in 2012. Coal-fired generation dropped 500 billion kilowatt-hours or 25% of its 2007 peak total, while natural gas gained 300 billion kilowatt-hours. Renewable energy also gained at coal's expense, with non-hydro renewable energy jumping 113 billion kilowatt-hours.
Looking out to 2040, the EIA projects, in its latest Annual Report, that gas will pass coal, as America's leading source of electric power, in 2035. Does that projection understate or overstate the role of natural gas in making America's power in the next two decades? The truth is nobody knows.
What the period from 2007 to 2012 shows is how dramatically and quickly large energy trends can change. What looked certain 6 years ago proved uncertain 6 years later. In fact, gas and renewable energy have done much better in the marketplace in the last 5 years than conventional wisdom expected just 6 years ago.
My expectation is that over the next 20 years the biggest shake up of the electricity generation industry will come from booming solar, increasingly competitive energy storage, substantial market gains by fuel cells, and rising energy efficiency.