Renewables

Solar and wind will trim fossil generation’s market share through ’24, EIA says

Declining construction costs and favorable tax credits are two factors that benefit renewable resources.
Solar and wind will trim fossil generation’s market share through ’24, EIA says
(Courtesy Dominion Energy.)

U.S. electricity generation by energy source

Data source: U.S. Energy Information Administration, Short-Term Energy Outlook (STEO)

Increased power generation from new renewables capacity—mostly wind and solar—are expected to reduce generation from both coal-fired and natural gas-fired power plants in 2023 and 2024.

With new solar and wind projects coming online this year, the Energy Information Administration (EIA) now forecasts that these two energy sources will account for 16% of total generation in 2023. That would be up from 14% in 2022 and 8% in 2018.

By contrast, EIA’s forecast share of generation from coal falls from 20% in 2022 to 18% in 2023. The forecast share from natural gas declines from 39% to 38%.

EIA said that one big shift in the mix of electricity generation over the past few years has been the rapid expansion of renewable energy resources, especially solar and wind. It said the electric power sector operated about 74 GW of solar photovoltaic capacity at the end of 2022, about three times the capacity at the end of 2017. Wind power has grown by more than 60% since 2017 to about 143 GW of capacity.

Based on planned additions reported to EIA, solar capacity is forecast to expand another 63 GW (84%) by the end of 2024. EIA said that growth is consistent with its declining construction costs and favorable tax credits. Based on these factors, EIA said it expects that the solar generation share will rise from 3% of U.S. generation in 2022 to 5% in 2023 and 6% in 2024.

Scheduled growth in wind power is slightly slower this year than in recent years, EIA said, at about 12 GW of new planned capacity over the next two years. The forecast wind generation share in 2023 remains similar to last year, EIA said, averaging 11%, and then rising to 12% in 2024.

Much of the solar capacity growth is in Texas and California, where natural gas has been the primary source of electricity. A growing share of generation from renewables, along with a forecast of less overall electricity demand in 2023, displaces some natural gas generation, EIA said. The fuel’s share is expected to fall from 39% in 2022 to 38% in 2023 and to 37% in 2024.

EIA said it also expects that the coal generation share will fall by two percentage points to 18% this year, as lower natural gas fuel costs make coal a less competitive source for electricity supply. EIA’s forecast of coal generation falls again in 2024 to 17%.

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