U.S. natural gas generation sees its first year-over-year decline in three years
In the first four months of 2021, natural gas-fired generation in the lower 48 states has decreased by nearly 7%Â from the same period in 2020, said the U.S. Energy Information Administration (EIA) in a statement yesterday.
This decline in natural gas generation during the first four months of this year is the result of higher natural gas prices and increased competition from renewables and it is the first year-over-year decline since 2017, said the report. Overall, U.S. electricity generation during the period increased 6.6% compared with 2020 because of colder winter weather.
In the first four months of 2021, natural gas-fired generation in the Lower 48 states averaged 3,394 gigawatthours (GWh) per day, a nearly 7% decrease from the same period in 2020, according to data from our
Hourly Electric Grid Monitor. The decline in natural gas generation during the first four months of this year is the result of higher natural gas prices and increased competition from renewables, and it is the first year-over-year decline since 2017. Overall, U.S. electricity generation during the period increased 6.6% compared with 2020 because of colder winter weather.
Natural gas-fired generation has been facing increased competition from renewable generation in the United States because of recent record-high capacity additions to wind and solar power plants. Between May 2020 and February 2021 (the most recent month for which we have data), 22.5 gigawatts (GW) of combined net wind and solar electric generating capacity additions came online in the United States, a 15% in
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Texas, already the US state with the most wind energy capacity, is catching up to California in utility-scale solar capacity. California currently has the most installed utility-scale solar capacity of any state. According to survey reports on EIA’s Preliminary Monthly Electric Generator Inventory , Texas will add 10 GW of utility-scale solar capacity by the end of 2022, compared with 3.2 GW in California. One-third of the utility-scale solar capacity planned to come online in the US in the next two years (30 GW) will be in Texas.
Source: U.S. Energy Information Administration, Detailed State Data, Preliminary Monthly Electric Generator Inventory.
The installation of 2.5 GW of solar capacity in 2020 marked the beginning of the solar boom in Texas. EIA expects the state to add another 4.6 GW of solar capacity in 2021 and 5.4 GW in 2022, which will bring total installed solar capacity in Texas to 14.9 GW.
The timing and magnitude of wind turbine installations in the United States are often driven by tax incentives. The U.S. production tax credit (PTC), a per-kilowatthour (kWh) credit for electricity generated by eligible renewable sources, was first enacted in 1992 and has been extended and modified in the years since. At the end of December 2020, Congress extended the PTC at 60% of the full credit amount, or $0.018 per kWh ($18 per megawatthour), for another year through December 31, 2021. In 2020, the credit was 60% of the full credit amount. Under the new PTC legislation, qualifying wind projects must begin construction by December 31, 2021.
Based on previous PTC legislation, wind projects that started construction in 2016 qualify for 100% of the full credit amount. After 2016, the percentage decreases by 20% per year from 2017 through 2019; facilities starting construction in 2019 qualify for 40% of the full credit amount.