Annual Energy Outlook 2006 with Projections to 2030 - Usinfo.org

OverviewSince 1992, the energy intensity of the U.S. economyhas declined on average by 1.9 percent per year, andthe share of total industrial production accounted forby the energy-intensive industries has fallen sharply,by 1.3 percent per year on average from 1992 to 2004.In the AEO2006 reference case, the energy-intensiveindustries’ share of total industrial output is projectedto continue to decline, but at a slower rate of 0.8percent per year, leading to a slower rate of reductionin energy intensity.Historically, energy use per person has varied overtime with the level of economic growth, weather conditions,and energy prices, among many other factors.During the late 1970s and early 1980s, energy consumptionper capita fell in response to high energyprices and weak economic growth. Starting in the late1980s and lasting through 2000, energy consumptionper capita generally increased with declining energyprices and strong economic growth. Per capita energyuse is projected to increase in the AEO2006 referencecase, with growth in demand for energy services onlypartially offset by efficiency gains. Per capita energyuse increases by an average of 0.3 percent per yearbetween 2004 and 2030 in the AEO2006 referencecase, less than was projected in the AEO2005 referencecase, 0.5 percent per year between 2004 and2025, primarily because of the higher projectedenergy prices in AEO2006.Recently, as energy prices have risen, the potentialfor more energy conservation has received increasedattention. Although some additional energy conservationis induced by higher energy prices in the AEO-2006 reference case, no policy-induced conservationmeasures are assumed beyond those in existing legislationand regulation, nor does the reference caseassume behavioral changes beyond those observed inthe past.Electricity GenerationIn the AEO2006 reference case, the projected averageprices of natural gas and coal delivered to electricitygenerators in 2025 are, respectively, 31 cents and11 cents per million Btu higher than the comparableprices in AEO2005. Although the projected levels ofcoal consumption for electricity generation in 2025are similar in the two forecasts, higher natural gasprices and slower growth in electricity demand inAEO2006 lead to significantly lower levels of naturalgas consumption for electricity generation. As aresult, projected cumulative capacity additions andgeneration from natural-gas-fired power plants arelower in the AEO2006 reference case, and capacityadditions and generation from coal-fired power plantsthrough 2025 are similar to those in AEO2005.Inthelater years of the AEO2006 projection, natural-gasfiredgeneration is expected to decline, displaced bygeneration from new coal-fired plants (Figure 5). TheAEO2006 projection of 1,070 billion kilowatthours ofelectricity generation from natural gas in 2025 is 24percent lower than the AEO2005 projection of 1,406billion kilowatthours.In the AEO2006 reference case, the natural gas shareof electricity generation (including generation in theend-use sectors) is projected to increase from 18 percentin 2004 to 22 percent around 2020, before fallingto 17 percent in 2030. The coal share is projected todecline slightly, from 50 percent in 2004 to 49 percentin 2020, before increasing to 57 percent in 2030. Additionsto coal-fired generating capacity in the AEO-2006 reference case are projected to total 102gigawatts between 2004 and 2025, as compared with86 gigawatts in AEO2005. Over the entire periodfrom 2004 to 2030, 174 gigawatts of new coal-firedgenerating capacity is projected to be added in theAEO2006 reference case, including 19 gigawatts atCTL plants.Nuclear generating capacity in the AEO2006 referencecase is projected to increase from about 100gigawatts in 2004 to about 109 gigawatts in 2019 andto remain at that level (about 10 percent of total U.S.generating capacity) through 2030. The total projectedincrease in nuclear capacity between 2004 and2030 includes 3 gigawatts expected to come fromuprates of existing plants that continue operating and6 gigawatts of capacity at newly constructed powerplants, stimulated by the provisions in EPACT2005,that are expected to begin operation between 2014and 2020.Additional nuclear capacity is projected in some of thealternative AEO2006 cases. Total electricity generationfrom nuclear power plants is projected to growFigure 5. Electricity generation by fuel, 1980-2030(billion kilowatthours)4,0003,0002,0001,0002,094HistoryElectricity demand5,6191980 2030ProjectionsCoalNatural gasNuclearRenewables0Petroleum1980 1995 2004 2015 2030Energy Information Administration / Annual Energy Outlook 2006 7