Environment & Energy

The Electricity Mix in the United States Shifts from Fossil Fuels to Renewables
In this section, we discuss renewables displacing fossil fuels in the electric power sector.

Renewables displace fossil fuels in the electric power sector due to declining renewable technology costs and rising subsidies for renewable power
Economic growth paired with increasing electrification in end-use sectors results in stable growth in U.S. electric power demand through 2050 in all cases. Declining capital costs for solar panels, wind turbines, and battery storage, as well as government subsidies such as those included in the IRA, result in renewables becoming increasingly cost effective compared with the alternatives when building new power capacity.

Renewables are increasingly meeting power demand throughout the projection period (Figure 2). Natural gas, coal, and nuclear generation shares decline. Renewable power outcompetes nuclear power, even in the Low Zero-Carbon Technology Cost (ZTC) case, which evaluates the impact of more aggressive cost declines for nuclear and renewables than the Reference case. Most natural gas-fired generation comes from combined-cycled power plants as opposed to simple-cycle combustion turbines. Uncertainty in natural gas prices across cases leads to various projections for combined-cycle units in the short term, but in the long term, natural gas demand from the electric power sector stabilizes across all cases.


Data source: U.S. Energy Information Administration, Annual Energy Outlook 2023 (AE02023)
Note: Shaded regions represent maximum and minimum values for each projection year across the AEO2023 Reference case and side cases. Ref=Reference case.

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