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Electric power sector consumption of fossil fuels at lowest level since 1994 U.S. electric power sector consumption of fossil fuels, as explained in the article text Source: U.S. Energy Information Administration, Monthly Energy Review Fossil fuel consumption in the electric power sector declined to 22.5 quadrillion British thermal units (quads) in 2017, the lowest level since 1994. The declining trend in fossil fuel consumption by the power sector has been driven by a decrease in the use of coal and petroleum with a slightly offsetting increase in the use of natural gas. Changes in the fuel mix and improvements in electricity generating technology have also led the power sector to produce electricity while consuming fewer fossil fuels. In 2017, coal consumption by the electric power sector reached its lowest level since 1982, and petroleum consumption in the power sector was the lowest on record, based on data since 1949. Recent natural gas consumption in the power sector has generally been increasing, but 2017 consumption was slightly lower than the record-high 2016 level. In energy-equivalent terms, more coal was consumed in the power sector than natural gas in 2017, at 12.7 quads and 9.5 quads, respectively. However, in terms of electricity generation, natural gas-fired power plants in the electric power sector produced more electricity than coal-fired plants, at 31% and 30% of the U.S. total, respectively, in 2017. Natural gas-fired units tend to be more energy efficient, requiring less energy content to produce a unit of electricity. As recently as 2000, natural gas-fired power plants were on average about as efficient as coal-fired plants. Since then, new natural gas-fired power plants have tended to use combined-cycle generators, which are more efficient because the waste heat from the gas turbine is routed to a nearby steam turbine that generates additional power. Combined-cycle units now make up most of the natural gas-fired electricity generation capacity. By the end of 2018, natural gas combined-cycle units may surpass conventional coal-fired power plants to become the most prevalent technology for generating electricity in the United States. As the natural gas-fired generation fleet has grown and become more efficient, the generation-weighted average efficiency of fossil fuel-fired electricity generation has improved. In 1994, fossil fuel power plants required 10,400 British thermal units (Btu) of primary energy to produce each kilowatthour (kWh); by 2017 that rate had fallen to 9,400 Btu/kWh. These changes in energy consumption and efficiency have also affected carbon dioxide (CO2) emissions from the electric power sector, which in 2017 were the lowest since 1987. Because coal combustion is much more carbon intensive than natural gas combustion, CO2 emissions from coal were more than double those from natural gas in 2017, even though natural gas provided more electricity generation.

Spending on electricity distribution systems by major U.S. electric utilities—representing about 70% of total U.S. electric load—has risen 54% over the past two decades, from $31 billion to $51 billion annually. This increase has been largely driven by increases in capital investment. From 1996 to 2017, annual capital investment by these utilities for electric distribution systems nearly doubled, which was similar to increases in transmission investment over the same time period. Annual spending on customer expenses and operations and maintenance by these utilities also increased slightly. This information is based on reports to the Federal Energy Regulatory Commission (FERC) from major utilities. The electricity distribution system works to decrease voltage from high-power transmission lines and to deliver electricity to homes and businesses. Electric distribution spending is affected by the number of customers served, the amount of electricity sold, the number of miles of electric distribution wire installed (line miles), and the maximum amount of load on the lines at one time (peak load). Electric distribution system costs have been increasing faster than the growth of any of the other variables. Capital investment accounts for the largest share of distribution costs as utilities work to upgrade aging equipment. According to a 2015 U.S. Department of Energy report, 70% of power transformers are 25 years of age or older, 60% of circuit breakers are 30 years or older, and 70% of transmission lines are 25 years or older. Poles, wires, and substation transformers are being upgraded with advanced materials and new technology to better withstand extreme weather events, to allow easier frequency and voltage control during system emergencies, and to accommodate greater use of variable renewable generation (customer-sited wind and solar). Over the past decade, investment in overhead poles, wires, devices, and fixtures such as sensors, relays, and circuits has risen by 69%, and spending on substation transformers and other station equipment has increased by 35%. Investment in customer meters has more than doubled over the past decade as utilities have upgraded customer meters to smart meters that can be accessed remotely, communicate directly to utilities, and support smart consumption and pricing applications using real-time or near real-time electricity data. Customer-related expenses include advertising, reading meters, billing, and communicating with customers. Although expenses related to customer accounts and sales have decreased, spending on customer services and information systems has more than doubled over the past decade in an effort to better inform customers about outage locations and durations and to develop better customer outreach tools. Operations and maintenance (O&M) expenses have increased as electric distribution systems experience stress from several factors, including more customers, variable generation, and the effects of storms, wildfires, and flooding. Managing a grid with increasing amounts of customer-sited variable generation increases wear and tear on the distribution equipment required to maintain voltage and frequency within acceptable limits and to manage excessive heating of transformers during reverse power flow. According to FERC, the largest spending increases have occurred in the older, more populated systems, which include the Northeast Power Coordinating Council (New York City and Boston), Reliability First (Chicago, Detroit, Philadelphia, Baltimore-Washington, DC), and the Western Electricity Coordinating Council (Los Angeles, San Francisco).

Volcanic lava flows continue to affect geothermal power generation on Hawaii’s Big Island Hawaii (Big Island) power plants, as explained in the article text Source: U.S. Energy Information Administration, Preliminary Monthly Electric Generator Inventory, and Hawaiian Electric Lava flows from the Kilauea volcano on the island of Hawaii led to the shutdown of the Puna Geothermal Venture (PGV) power plant on May 3, 2018. The 38-megawatt (MW) facility is the only geothermal plant on the island, and it produced about 29% of the island’s electricity generation in 2017. The plant voluntarily ceased operations ahead of the approaching lava flow. Continuing eruptions in lower Puna, the southeastern corner of the island, have damaged transmission lines and equipment, and local residences are experiencing extended power outages. The island’s utility, Hawaii Electric Light Co (HELCO), has implemented switching operations to reroute power from its nearby plants to customers in undamaged areas of lower Puna. PGV is a geothermal plant drawing steam and hot geothermal fluid up through 11 production wells drilled 6,000 feet to 8,000 feet deep. Pressurized steam from the hot fluid, along with non-condensable gases, is routed through the facility to drive a turbine generator that produces electricity. Exhaust steam from the turbine is used to vaporize a working fluid, which drives a second turbine that generates additional electricity. The remaining steam (along with geothermal fluid) is reinjected into the ground through reinjection wells. Plant operators quenched 10 of the 11 geothermal wells to prevent them from releasing gases. Quenching involves injecting the well with water to cool and depressurize it. The 11th well was plugged with bentonite clay after quenching efforts were unsuccessful. Two of the capped geothermal wells, identified as KS-5 and KS-6, were covered by lava from the Kilauea fissures in late May. A transmission substation and a warehouse containing a drilling rig were also destroyed by the lava flows. PGV's generating capacity of 25 MW when it opened in 1993 was expanded to 30 MW in 1995 and then to 38 MW in 2012. In March 2018, the facility owner announced plans to increase capacity to 46 MW by 2020. The plant is the largest renewable power plant on the island. More than half of the island’s power generation mix is fueled by petroleum, based on EIA data for 2016. The remaining 44% is from various renewable sources. Of these, geothermal (20% of the island’s generation mix) is the largest, followed by wind (11%), small-scale solar photovoltaic (9%), and hydropower (5%).

Wind generators’ cost declines reflect technology improvements and siting decisions U.S. onshore wind capital costs, as explained in the article text Source: U.S. Energy Information Administration, based on U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy (EERE), Wind Technology Market Report Between 2010 and 2016, the capacity-weighted average cost (real 2016$) of U.S. wind installations declined by one-third, from $2,361 per kilowatt (kW) to $1,587/kW, based on analysis in the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy’s (DOE/EERE) Wind Technology Market Report. The reasons for this decline include improving technology and manufacturing capability and an increasing concentration of builds in the regions of the United States with the lowest installation costs. After many years of declining real project costs, wind reached a low in 2004 at $1,342/kW. Through the remainder of that decade, costs gradually increased, reaching a peak in 2009 and 2010 of about $2,360/kW. Contributing factors to the increasing costs through 2010 included increasing labor costs, an increase in the cost of key manufacturing and construction commodities, and international currency exchange fluctuations affecting imports of key equipment. After 2010, installed costs began to decline as some of those pressures lifted. The global recession of 2008 reduced the cost of key construction and manufacturing commodities. Domestic manufacturing capacity for wind turbine components increased, and the increasing pace of installations helped to reduce both turbine manufacturing and installation costs through learning-by-doing effects, even as higher-performing equipment continued to enter the wind turbine market. U.S. wind capacity additions by region, as explained in the article text Source: U.S. Energy Information Administration, based on U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy (EERE), Wind Technology Market Report Regional variations in wind turbine installation costs also have an effect on reported U.S. average costs. In 2010, the Interior region of the United States had an average installation cost of $2,069/kW, compared with $2,247/kW for the rest of the country. By 2016, the costs in the Interior had dropped 25% from 2010 levels to $1,531/kW, and costs in the rest of the United States had dropped 10% to $2,025/kW. EIA began collecting capital cost data for new generators in 2013, and this data closely tracks the estimates from DOE/EERE. Also in 2010, the share of wind capacity installations was almost evenly split between the Interior and the rest of the United States, with only 46% of capacity entering service that year in the Interior. By 2016, almost 90% of incremental capacity was installed in the lower-cost Interior region. This capacity takes advantage of not only the more favorable wind resources of the region, but also the easily developed expanses of flat land (allowing for larger project sizes) and transportation access to the developing concentration of turbine component manufacturing in this region. The increasing concentration of U.S. wind builds in the low-cost Interior region of the country has reinforced the overall decline in the average cost of wind construction. Because of the recent increase in the overall capacity mix in this region, the national rate of decline in wind costs closely tracks the cost declines for the Interior. Although other factors have affected overall costs, 2016 average installed costs for wind in the United States would have been more than 10% higher if total wind installations had remained at their 2010 geographic market shares. Principal contributor: Chris Namovicz

Natural gas-fired electricity generation this summer expected to be near record high monthly U.S. electric generation by fuel, as explained in the article text Source: U.S. Energy Information Administration, Short-Term Energy Outlook EIA’s July 2018 Short-Term Energy Outlook (STEO) expects natural gas-fired power plants to supply 37% of U.S. electricity generation this summer (June, July, and August), near the record-high natural gas-fired generation share in summer 2016. EIA forecasts the share of generation from coal-fired power plants will drop slightly to 30% in summer 2018, continuing a multi-year trend of lower coal-fired electricity generation. The share of electricity generation supplied by natural gas-fired power plants has increased over the past decade, while the share supplied by coal has fallen, primarily as a result of sustained low natural gas prices, increases in natural gas-fired capacity, and retirements of coal-fired generating capacity. Over the three-year period from 2015 to 2017, the cost of natural gas delivered to electric generators averaged $3.16 per million Btu (MMBtu), compared with $7.69/MMBtu between 2006 and 2008. The combination of relatively low natural gas prices, environmental regulations, and supportive renewable energy policies has led the industry to build new natural gas-fired and renewable capacity and to retire coal-fired power plants. As reported on EIA’s Preliminary Monthly Electric Generator Inventory, power plant operators added 5.4 gigawatts (GW) of new natural gas-fired generating capacity during the first four months of 2018 with an additional 15 GW scheduled to come online through the end of the year. This addition would be the largest increase in natural gas capacity since 2004. The electric industry also added 2.6 GW of new utility-scale solar and wind generating capacity during the first four months of the year, with an additional 9.6 GW scheduled to come online by the end of 2018. More than 10 GW of coal-fired capacity was retired over the 12-month period ending April 2018. EIA forecasts the delivered cost of natural gas will average $3.16/MMBtu this summer, 2% lower than the average cost during the summer of 2017. In contrast, the cost of coal delivered to electric generators is forecast to rise slightly this summer. The continued low cost of natural gas, along with the recent additions of natural gas-fired capacity and retirements of coal power plants, drive EIA’s expectation that natural gas will contribute a growing share of electricity generation this summer, while coal's share will fall. The largest changes in generation shares occur in the Midwest census region. During the summer of 2018, EIA expects natural gas will supply 20% of electricity in the Midwest, up from 15% last summer. The forecast share of generation from coal in the Midwest falls from 53% last summer to 49% this summer. Unlike the rest of the country, natural gas generation in the West census region is forecast to decline this summer as renewable energy generating capacity increases. Nearly 2 GW of utility-scale solar generating capacity came online in the West census region during the 12 months ending in April. EIA forecasts the share of generation in the West from renewable sources other than hydropower will increase to 16% in summer 2018, up from 14% last summer.

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