EIA: Projected Growth in Gas-Fired Generation Influenced by Resource Availability

Different scenarios of natural gas resource availability in the EIA’s Annual Energy Outlook 2014, Reference case, High Oil and Gas Resource case, and Low Oil and Gas Resource case affect the growth of natural gas-fired electric generation.

As increasing amounts of natural gas become economically available to the power sector and onsite generators, gas-fired electric generation increases in all three cases. However, the cases differ in terms of whether growth in gas-fired generation is sufficient to overtake coal-fired generation by 2040.

Growth in natural gas-fired generation comes from two sources: the power sector and the end-use sector. Growth in natural gas-fired generation in the power sector accounts for 78% of the overall increase in generation from that fuel through 2040 in the Reference case; growth in the end-use sector—largely firms in manufacturing industries that use natural gas-fired combined heat and power units for onsite electricity generation—accounts for the remaining 22%. Growth in natural gas-fired generation in both of these sectors results in natural gas-fired generation surpassing coal-fired generation by 2040.

By contrast, power sector growth alone is sufficient to push total natural gas-fired generation above coal-fired generation in the High Resource case. Greater resource availability, leading to a lower increase in natural gas prices, makes generation from natural gas-fired units even more economically feasible than in the Reference case. The opposite occurs in the Low Resource case, which projects that, due largely to low resource availability and a higher increase in natural gas prices than in the Reference case, total natural gas-fired generation remains below coal-fired generation through 2040.

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Source: EIA, June 13, 2014