EBF 301
Global Finance for the Earth, Energy, and Materials Industries

Major Sources of Energy in the United States

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“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 a minor share (about 1% and less).

Chart showing U.S. electricity generation at utility-scale facilities in 2016. See description in paragraph above.
Figure 1: Major energy sources and percent shares of U.S. electricity generation at utility-scale facilities in 2016
Click to expand to provide more information

U.S. Energy Generation at Utility-Scale Facilities in 2016

Total = 97.4 quadrillion British thermal units (Btu)

  • NaturalGas: 34%
  • Coal: 31%
  • Nuclear: 20%
  • Renewables: 15% 

The renewables are broken down as follows:

  • Hydropower: 6.6%
  • Wind: 5.7%
  • Biomass: 1.5%
  • Solar: 0.9%
  • Geothermal: 0.4%

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.

US net electricity generation from select fuels. Described in paragraph above.
Figure 2: U.S. Electricity Generation by Fuel
Source: EIA Annual Energy Outlook 2017

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.

Graph showing renewable electricity generation. Described in paragraph above.
Figure 3: Renewable electricity generation
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Renewable electricity generation

2000 - 2016 (history) and 2017 - 2040 (projections)

Geothermal: Geothermal generation was relatively stable, and very low, from 2000 - 2016. It is projected to increase slightly to about 50 billion kilowatt-hours (kWh)by 2040.

Biomass: Biomass generation has remained steady at about 50 billion kWh from 2000 - 2016 and is expected to stay much the same until 2040.

Hydroelectric: Hydroelectric generation widely between about 210 billion kWh and 320 billion kWh from 2000 - 2016. It is expected to remain fairly stable at around 310 kWh through 2040.

Utility-scale and end-use solar: Solar generated almost zero kWh from 200 - 2012. It rose from almost zero to about 50 billion kWh by 2016 and is expected to grow steadily to 400 billion kWh by 2040.

Wind: Wind power generated almost no power until 2004. from 2004 until 2016 it rose to about 225 billion kWh. it is expected to grow steadily to about 500 billion kWh by around 2025 at which time it is expected to plateau.

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.