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Electricity Demand Will Return to 2019 Levels in 2025: EIA

image credit: Energy Information Administration
Rakesh  Sharma's picture
Journalist, Freelance Journalist

I am a New York-based freelance journalist interested in energy markets. I write about energy policy, trading markets, and energy management topics. You can see more of my writing...

  • Member since 2006
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  • Feb 5, 2021

If you thought that Covid-19 signaled a radical shift in electricity markets, think again. The latest outlook from the Energy and Information Administration (EIA) predicts that the share of renewable energy technologies in the electricity generation mix will more than double by 2050. In 2020, renewable energy accounted for 18% of overall electricity generation capacity, meaning it will amount to roughly 36% of the mix by 2050. That figure might have been a cause for celebration were it not for the fact that the same agency estimated a 38% share for renewable energy by 2050 last year.

To be sure, the pandemic has altered the short-term outlook for electricity demand, which crashed in 2020. According to EIA, demand for electricity is not expected to return to 2019 levels until 2025. Even the long-term future for electricity demand does not look good, with modest increases, averaging more than 1%, expected until 2050. Still, this projected recovery is steeper and better than the one experienced in the aftermath of the 2008 financial crisis. In fact, in a high economic growth scenario, electricity demand should equal its peak during the boom years of Bush Jr.’s presidency.

Depending on their generation costs, renewable energy and natural gas are in a tussle to provide for most of the increased demand. Renewable energy sources will account for most of the capacity additions of between 52% to 84%, depending on the cost case, by 2050. The overall generation capacity is expected to increase by two-thirds.

Not all of those additions will go towards generating electricity. Some will be used to meet baseload generation capacity, if solar and wind go down, Angelina LaRose, assistant EIA administrator, told Utility Dive. Thus, the actual net generation capacity, or the actual number of resources used to generate electricity, will increase by only about a third by 2050.   

The EIA’s current modeling estimates for low and high prices of renewable energy put its share between 25% and 51% of the overall capacity by 2050. Those figures are contingent on several developments, from retirement of coal plants to capacity additions to government policies that encourage development of renewable energy technology.

The real utility of Covid-19 lies in its decisive role to accelerate these developments. Global recovery around the world is predicated on a green stimulus that propels renewable energy technologies to the forefront of energy systems. Wall Street has also warmed up to the idea of reductions in CO2 emissions and business leaders throughout the world are emphasizing the importance of Environmental, Social, and Governance (ESG) criteria for investment and revenues.

Patrick McGarry's picture
Patrick McGarry on Feb 5, 2021

Thanks for the post Rakesh. Excellent summary. I wonder what this means for the "electrification of everything" which we initially thought would increase overall net demand? Only time will tell!


Matt Chester's picture
Matt Chester on Feb 5, 2021

It's also worth noting that EIA's outlooks are not predictions of where the market might go but rather the trends that will continue in a business as usual, without additional policy that might drive electrification faster, etc. 

Peter Farley's picture
Peter Farley on Feb 16, 2021

This does not seem to gell with utility or consumer plans let alone state mandates which now cover 60% of the population. As far as I remember the US is expected to add about 33 GW of renewable capacity this year. If the US only averages 40 GW of wind and solar per year that should add over 100 TWh per year of new generation. That is not a particularly high rate of growth, Australia another climate lagard with electricity demand only 6% of the US, is adding 12 TWh from renewables per year

At that slow rate by 2050, new renewables will be supplying 3,000 TWh/y. Renewables including hydro already supply 820 TWh per year and total demand is 4,000 TWh. Even if demand does grow by 1% per year (optimistic) it will be 5,300 TWh so renewables will be 72% of generation 


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