“Non-renewable” energy sources (such as Oil and Petroleum Products, Natural Gas, Natural Gas Liquid, Coal, and Nuclear), as well as “renewable” energy and “alternative fuels” (such as Hydro, Solar, Wind, Geothermal, Biomass, and Biofuels) help to satisfy the nation’s energy needs. Fossil fuels and nuclear power are considered non-renewable sources of energy. Coal and natural gas play large roles in the generation of electricity as well as in industrial processes such as the manufacturing of steel. Hydro, solar, wind, biomass, biofuels, and geothermal are all considered “renewable” forms of energy and comprise varying levels of supply in this country. They are classified as renewables since their source is seen as being virtually unlimited. Of these, solar, wind, biomass, biodiesel, and geothermal are all considered “alternative” energy sources since they are not the “traditional” kind (fossil fuels, nuclear and, hydro).
The following pie chart is created from EIA reported data and shows major energy sources and percent shares of U.S. electricity generation at utility-scale facilities in 2016. Please note that in 2016 natural gas has the largest share (34%) in U.S. electricity generation, coal has the second place (31%), and nuclear is in the third place (20%). As shown in figure 1, renewable energy sources contribute to about 15% of the U.S. electricity production at utility-scale facilities as of 2016, with about 6.6% hydro and 5.7% wind power. Please note that other renewable sources such as solar, biomass and geothermal have minor share (about 1% and less).
Figure 2 below shows the break-out of fuel sources used in the generation of electricity. As you can see, the single largest fuel has been coal in the past decades, although this is changing as historically low natural gas prices are causing some “fuel switching.” This was followed by natural gas, nuclear, and renewable energy sources. This final category is comprised of energy sources such as wind, solar, hydroelectric, biomass, and geothermal.
Figure 3, below, displays the renewable energy sources that contribute to power generation. As you can see, there has been a rapid increase in wind and solar power generation. However, it will take decades for alternative fuels to make a substantial contribution to the energy portfolio in the United States. Thus, there is a need to continue to use fossil fuels and nuclear power to “bridge” the gap. How the former (fossil fuels and nuclear power) are delivered to market and how they are priced is the main focus of this course.
Now that we have clarified the difference between renewable and non-renewable sources of energy, let’s have a look at the production and consumption of energy in the United States on a macro level.