Now and in the Future

Transcription

1 Electricity Demand Outlook: Now and in the Future Hillard Huntington Energy Modeling Forum Stanford University NCSL TASK FORCE ON ENERGY SUPPLY DECEMBER 9, 2009 SAN DIEGO, CALIFORNIA

2 Issues for this Morning s Discussion Discuss EIA s reference projection for electricity. Electricity sales grow 1.5% per year slower than the economy. EIA s ability to project past trends. All models are wrong, but some are useful. George E. P. Box Selected issues that can change the picture. World oil price path (not discussed here) U.S. and international climate change policy Expanded U.S. shale natural gas reserves 2

3 Stanford Univ. Energy Modeling Forum Do not compare different best-guess forecasts with each other or with past trends. Compare how different models answer the same question. Example: climate models have different reference scenarios (oil price, GDP). Our focus: how does society close gap between reference and CO2-constrained worlds. Which technologies, energy sources, policies, etc. Group includes users and modelers; user perspective very important. 3

4 EIA s Annual Energy Outlooks Focus will be on 2009 Annual Energy Outlook Stimulus Case. Incorporates the provisions of the American Recovery and Reinvestment Act (ARRA) The Early Release for next year's 2010 Annual Energy Outlook will be available on December 14 th. Modest increases in U.S. natural gas production Projections extended through

5 2009 AEO Growth Rates, Real GDP CO2 Emissions i Per Capita CO2 Total Energy Electricity Oil Natural Gas Coal Nuclear Hydropower Biomass Other Renewable 2007$ Prices: Imported Oil Gas Wellhead Coal Delivered Average Electricity -1.00% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% Annual Growth Rate (% per year) 5

6 US Electricity Consumption Trends 6

7 Electricity Generation by Source 7

8 New Power Plants 8

9 Costs for New Power Plants 9

10 Electricity Prices Eventually Rise 10

11 Modest Nuclear Expansion 11

12 Regional Renewable Power Generation 12

13 Census Regions Used in EIA Model 13

14 Regional Electricity Consumption Growth United States 0.96% Pacific 0.97% Mountain 1.52% West South Central 1.01% East South Central 0.81% South Atlantic 1.26% West North Central 0.85% East North Central 0.70% Middle Atlantic 0.45% New England 0.67% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% Annual Growth Rate (% per year) 14

15 How accurate have energy projections been? EIA (and FEA) has projected US energy markets since 1982 (1974). EIA assumes no future policy changes. Biggest errors: recent policy changes are difficult to project (e.g., Clean Air Act). With correct GDP, EIA underestimates energy use. Detailed errors tend to cancel each other. Small errors in forecasting total energy consumption. But GDP overestimated and energy intensity underestimated by 15%.

16 U.S. Climate Change Policy EIA assumes that climate policy will be similar to Lieberman- Warner Climate Security Act of Cap-and-trade program increases electricity generation costs and raises average electricity prices by 22% more than reference case in Energy demand grows more slowly annually over the period: Total energy annual growth slows from 0.5% to 0.24%. Electricity annual growth slows from 1.0% to 0.55%. 16

17 EIA Limits Natural Gas Supplies Major uncertainties about shale gas resources and environmental constraints. NEMS-RFF allows shale gas resources to reach Potential Gas Committee estimates. Brown et al Resources for the Future discussion paper. More gas production allows power sector to expand gasfired generation. New gas supplies reduce electricity costs somewhat. Electricity consumption is slightly faster (by 0.1% annually). CO2 emissions are marginally higher with more power use. Fuel substitution within power sector works in both directions. higher when gas replaces nuclear/renewables. - CO2 lower when gas replaces coal. -CO2 17

18 Concluding Perspectives Electricity consumption reflects economic conditions EIA reference case calls for 2.5% annual growth in the economy 1.0% annual al growth in electricity consumption Electricity tracks regional economic growth Highest in Mountain and South Atlantic states (>1.25% p.a.) Lowest in northeastern and midwestern states (<0.7% p.a.) Demand growth will be less if an effective climate change policy is adopted Expanded natural gas production will replace coal, nuclear and renewables in power sector Modestly higher electricity consumption due to lower prices 18