Electricity sector of the United States

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United States electricity generation by fuel

The electricity sector of the United States includes a large array of stakeholders that provide services through electricity generation, transmission, distribution and marketing for industrial, commercial, public and residential customers. It also includes many public institutions that regulate the sector. In 1996, there were 3,195 electric utilities in the United States, of which fewer than 1,000 were engaged in power generation. This leaves a large number of mostly smaller utilities engaged only in power distribution. There were also 65 power marketers. Of all utilities, 2,020 were publicly owned (including 10 Federal utilities), 932 were rural electric cooperatives, and 243 were investor-owned utilities.[1] The electricity transmission network is controlled by Independent System Operators or Regional Transmission Organizations, which are not-for-profit organizations that are obliged to provide indiscriminate access to various suppliers in order to promote competition.

The four above-mentioned market segments of the U.S. electricity sector are regulated by different public institutions with some functional overlaps: The federal government sets general policies through the Department of Energy, environmental policy through the Environmental Protection Agency and consumer protection policy through the Federal Trade Commission. The safety of nuclear power plants is overseen by the Nuclear Regulatory Commission. Economic regulation of the distribution segment is a state responsibility, usually carried out through Public Utilities Commissions; the inter-state transmission segment is regulated by the federal government through the Federal Energy Regulatory Commission.

Sources of electricity in the U.S. in 2012

Fossil fuel generation (mainly coal) was the largest source. Of the electricity generated in the United States in 2006, 70% was produced from fossil fuels (mainly coal and natural gas), almost 20% came from nuclear power, 7% from hydropower and 3% from other forms of renewable energy such as wind and solar energy.[2] The share of renewable energy, in particular wind and solar energy, has increased substantially since 2006 and is expected to increase further.

In 2008 the average electricity tariff in the U.S. was 9.82 Cents/kilowatt-hour (kWh).[3] In 2006-07 electricity tariffs in the U.S. were higher than in Australia, Canada, France, Sweden and Finland, but lower than in Germany, Italy, Spain and the UK.[4] Residential tariffs vary significantly between states from 6.7 Cents/kWh in West Virginia to 24.1 Cents/kWh in Hawaii. The average residential bill in 2007 was US$ 100/month. Most investments in the U.S. electricity sector are financed by private companies through debt and equity. However, some investments are indirectly financed by taxpayers through various subsidies ranging from tax incentives to subsidies for research and development, feed-in tariffs for renewable energy and support to low-income households to pay their electric bills.

Electricity consumption[edit]

Electricity consumption per person (per capita) is based upon data mined from US DOE Energy Information Administration/Electric Power Annual 2012 files[5] Data was obtained from the most recent DOE Energy Information Agency (EIA) files.[6] Population[7] data is from Demographics of the United States. Per capita consumption in 2012 is down 3.2 % from a decade ago and down 6% from its peak in 2007.

Yearly US Per capita Consumption (kWh) by Fuel Source 1999-2012
Year Population(M) Fossil Fuel Nuclear Renewable Misc Total
Coal Oil Gas sub
total
Hydro Geo
Thermal
Solar Wind Wood Bio
other
sub
Total
2012 313.874 4,824 74 3,944 8,841 2,451 880 50 14 449 120 63 1,576 179 13,047
2011 313.85 5,523 96 3,267 8,886 2,518 1,018 49 6 383 119 61 1,636 147 13,187
2010 309.33 5,972 120 3,230 9,321 2,609 841 49 3.9 306 120 61 1,382 108 13,419
2009 307.01 5,719 127 3,034 8,881 2,602 891 49 2.9 241 117 60 1,361 135 12,978
2008 304.38 6,524 152 2,939 9,616 2,649 837 49 2.8 182 123 58 1,252 126 13,642
2007 301.58 6,686 218 3,018 9,922 2,674 821 49 2.0 114 129 55 1,170 121 13,887
2006 298.59 6,666 215 2,782 9,663 2,636 969 49 1.7 89 130 54 1,292 83 13,675
2005 295.75 6,806 413 2,618 9,838 2,644 914 50 1.9 60 131 52 1,209 105 13,796
2004 293.05 6,751 413 2,475 9,639 2,691 916 51 2.0 48 130 53 1,199 58 13,588
2003 290.33 6,798 411 2,292 9,502 2,631 950 50 1.8 39 129 54 1,224 41 13,397
2002 287.80 6,717 329 2,441 9,486 2,710 918 50 1.9 36 134 52 1,193 90 13,479
2001 285.08 6,679 438 2,274 9,390 2,697 761 48 1.9 24 123 51 1,009 88 13,185
2000 282.17 6,968 394 2,179 9,542 2,672 977 50 1.7 20 133 82 1,263 117 13,594
1999 279.04 6,741 423 2,045 9,209 2,610 1,145 53 1.8 16 133 81 1,430 96 13,345
  1. Gas includes Natural Gas and Other Gases.
  2. Solar includes Photovoltaics and Thermal.
  3. Misc includes Misc generation, Pumped storage, and Net imports.
  4. Bio Other includes Waste, Landfill Gas, and Other.
  5. Hydro excludes pumped storage (not an energy source, used by all sources, other than hydro).
  6. Total includes Net imports.

Electricity generation[edit]

In 2012 the total installed electricity generation summer capacity in the United States was 1,063 Gigawatts. The main energy sources for electricity generation include:[8]

  • Thermal/Fossil 776 GW
  • Nuclear 102 GW
  • Hydropower 79 GW
  • Wind 59 GW

Actual USA electricity generation in 2012 of 4,047.7 Terawatt hours. The USA also imported 59.3 Terawatt hours and exported 12 Terawatt hours:[9] making a total of 4095 Terawatt hours for consumption. Electricity generation was primarily from the following sources:

  • Thermal/Fossil 2,775 TWh
  • Nuclear 769 TWh
  • Hydropower 276 TWh
  • Other renewables 218 TWh (including landfill gas, geothermal energy, solar and wind

The share of coal and nuclear in power generation is much higher than their share in installed capacity, because coal and nuclear plants provide base load and thus are running longer hours than natural gas and petroleum plants which typically provide peak load, while wind turbines and solar plants produce electricity when they can.

Yearly Electric Energy (B KWh (or Twh) per year) by Fuel Source)[10]
Year Fossil Fuel Nuclear Renewable Misc Total
Coal Oil Gas sub
total
Hydro Geo
Thermal
Solar Wind Wood Bio
other
sub
Total
2012 1,514.04 23.19 1,237.79 2,775.02 769.33 276.24 15.56 4.33 140.82 37.8 19.82 494.57 56.1 4095
2011 1,733.4 30.2 1,025.3 2,788.9 790.2 319.4 15.3 1.82 120.2 37.4 19.2 513.32 46 4138.4
2010 1,847.3 37.1 999.0 2,883.4 807.0 260.2 15.2 1.21 94.7 37.2 18.9 427.4 33.3 4,151.0
Proportion 44.5% 0.9% 24.1% 69.5% 19.4% 6.3% 0.37% 0.029% 2.3% 0.9% 0.5% 10.3% 0.8% 100.0%
2009 1,755.9 38.9 931.6 2,726.5 798.9 273.4 15.0 0.89 73.9 36.1 18.4 417.7 41.4 3,984.4
2008 1,985.8 46.2 894.7 2,926.7 806.2 254.8 14.8 0.86 55.4 37.3 17.7 380.9 38.3 4,152.2
2007 2,016.5 65.7 910.0 2,992.2 806.4 247.5 14.6 0.61 34.5 39.0 16.5 352.7 36.6 4,188.0
2000 1,966 111 615 2,692 754 260 14 0.49 5.6 37.6 23 318.7 38.6 3,836
Proportion 51.3% 2.9% 16.0% 70.2% 19.7% 7.2% 0.37% 0.013% 0.15% 1.0% 0.6% 9.3% 0.9% 100.0%
1999 1,881 118 57l 2,570 728 319.5 14.8 0.50 4.5 37 22.6 392.8 55 3,723.8
  1. Gas includes Natural Gas and Other Gases.
  2. Solar includes Photovoltaics and Thermal.
  3. Misc includes Misc generation, Pumped storage, and Net imports.
  4. Bio Other includes Waste, Landfill Gas, and Other.
  5. Hydro excludes pumped storage (not an energy source, used by all sources, other than hydro).
  6. Total includes Net imports.

The following tables summarize the electrical energy generated by fuel source for the USA. Data was mined from Electric Power Annual 2012[11]].

Electrical Production in the United States for 2012
Power Source Plants Summer Capacity (GWe) % of total Capacity Capacity factor Annual Energy (billion kWh)  % of annual production
Coal 557 309.7 29.13 0.558 1,514.04 36.97
Nat Gas 1,758 424.3 39.92 0.333 1237.79 30.23
Nuclear 66 101.9 9.59 0.862 769.33 18.79
Hydro 1,426 78.7 7.4 0.40 276.24 6.75
Renewables 1,956 77.1 7.25 0.323 218.33 5.33
Petroleum 1,129 47.2 4.44 0.056 23.19 0.57
Misc 64 1.7 .16 0.926 13.79 0.34
Storage 41 22.4 2.11 -.025 -4.95 -0.12
Import 47.26 1.15
Total 6997 1063 100 0.44 4,095 100

Coal and Gas[edit]

Fossil fuels – mainly coal and natural gas – remain the backbone of electricity generation in the U.S., accounting for 68% of installed generation capacity in 2010.

In 2007 the Department of Energy estimated the planned additional capacity for 2008-12 at 92 GW, most of which to be fueled by natural gas (48 GW) and coal (19GW).[12]

Nuclear power[edit]

As of 2007 in the United States, there are 104 commercial nuclear reactors in the US, generating approximately 20% of the nation's total electric energy consumption. For many years, no new nuclear plants have been built in the US. However, since 2005 there has been a renewed interest in nuclear power in the US. This has been facilitated in part by the federal government with the Nuclear Power 2010 Program of 2002.[13] and the Energy Policy Act.[14][15] As of March 9, 2009, the U.S. Nuclear Regulatory Commission had received applications for permission to construct 26 new nuclear power reactors[16] However, as of 2013 most of the new applications had been abandoned due to the low cost of electricity generated with natural gas which had become available at cheap prices due to the boom in hydraulic fracturing; gas produced using natural gas being 4 cents a kilowatt hour versus 10 cents, or more, for nuclear.[17]

Renewable energy[edit]

Electrical Production by Renewables in 2012
Power Source Plants Summer Capacity (GW) % of total Capacity Capacity Factor Annual Energy (billion kWh)  % of annual production
Hydro 4023 78.7 7.4 0.40 276.24 6.75
Wind 947 59 5.5 0.272 140.82 3.44
Wood 351 7.5 0.7 0.575 37.8 0.92
Biomass 1766 4.8 0.45 0.471 19.82 0.48
GeoThermal 197 2.6 0.24 0.683 15.56 0.38
Solar 553 3.2 0.3 0.154 4.33 0.11
Total 7837 155.8 14.66 0.362 494.57 12.08

The development of renewable energy and energy efficiency marks "a new era of energy exploration" in the United States, according to President Barack Obama.[18] In a joint address to the Congress on February 24, 2009, President Obama called for doubling renewable energy within the next three years.[19]

Renewable energy accounted for more than 10 percent of the domestically-produced energy used in the United States in the first half of 2008, consisting mainly of large hydropower.[20] According to a report by the Interior Department, U.S. wind power – including off-shore turbines – could more than meet U.S. electricity needs.[21] The Department of Energy has said wind power could generate 20% of US electricity by 2030.[22][23][24]

Several solar thermal power stations, including the new 64 MW Nevada Solar One, have also been built. The largest of these solar thermal power stations is the SEGS group of plants in the Mojave Desert with a total generating capacity of 354 MW, making the system the largest solar plant of any kind in the world.[25] The largest solar photovoltaic plant in the U.S. is the 14 MW Nellis Solar Power Plant, located near Las Vegas, Nevada, which is expected to produce more than 30 million kWh/year for Nellis Air Force Base.[26]

Energy efficiency and conservation[edit]

The federal government promotes energy efficiency through the Energy Star program. The Alliance to Save Energy, an industry group, also promotes energy efficiency.

Responsibilities in the electricity sector[edit]

Policy and regulation[edit]

Policy. Policy for the electricity sector in the United States is set by the executive and legislative bodies of the federal government and state governments. Within the executive branch of the federal government the Department of Energy plays a key role. In addition, the Environmental Protection Agency is in charge of environmental regulation and the Federal Trade Commission is in charge of consumer protection and the prevention of anti-competitive practices.

Key federal legislation related to the electricity sector includes:

Many state governments have been active in promoting renewable energy. For example, in 2007 25 states and the District of Columbia had established renewable portfolio standards (RPS).[27] There is no federal policy on RPS.

Regulation. The Federal Energy Regulatory Commission is in charge of regulating interstate electricity sales, wholesale electric rates, and licensing hydropower plants. Rates for electricity distribution are regulated by state-level Public Utilities Commissions or Public Services Commissions.

Deregulation and competition[edit]

Deregulation of the electricity sector consists in the introduction of competition and the unbundling of vertically integrated utilities in separate entities in charge of electricity generation, electricity transmission, electricity distribution and commercialization. The deregulation of the electricity sector in the U.S. began with the Energy Policy Act of 1992 which removed obstacles for wholesale competition. In practice, however, regulation has been unevenly introduced between states. It began in earnest only from 1996 onwards when the Federal Energy Regulatory Commission issued orders that required utilities to provide transmission services "on a reasonable and non-discriminatory basis". In some states, such as in California, private utilities were required to sell some of their power plants to prevent concentration of market power.[28]

As of April 2014, 16 U.S. states - Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Montana, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, and Texas - and the District of Columbia have deregulated their electricity markets in some capacity. Additionally, seven states - Arizona, Arkansas, California, Nevada, New Mexico, Virginia, and Wyoming - started electricity deregulation in some capacity but have since suspended deregulation.[29] The deregulation of the Texas electricity market in 2002 is one of the better-known examples.

Service provision[edit]

Electric utilities in the U.S. can be both in charge of electricity generation and electricity distribution. The electricity transmission network is not owned by individual utilities, but by companies and organizations that are obliged to provide indiscriminate access to various suppliers in order to promote competition. In 1996, there were 3,195 electric utilities in the United States and 65 power marketers. Of these, 2,020 were publicly owned (including 10 Federal utilities), 932 were rural electric cooperatives, and 243 were investor-owned utilities. Fewer than 1,000 utilities are engaged in power generation.[1]

Generation[edit]

About 80% of the electricity in the U.S. is generated by private ("investor-owned") utilities. The remaining electricity is produced by federal agencies such as the Tennessee Valley Authority (producing mainly nuclear and hydropower), the Bonneville Power Administration (in the Pacific Northwest) and the Power Marketing Administration of the Department of Energy(hydropower), municipal utilities and utility cooperatives.

The largest private electric producers in the United States include:

Transmission[edit]

There are two major alternating current (AC) power grids in North America, the Eastern Interconnection and the Western Interconnection. Besides this there are two minor power grids in the U.S., the Alaska Interconnection and the Texas Interconnection. The Eastern, Western and Texas Interconnections are tied together at various points with DC interconnects allowing electrical power to be transmitted throughout the contiguous U.S., Canada and parts of Mexico. The transmission grids are operated by transmission system operators (TSOs), not-for profit companies that are typically owned by the utilities in their respective service area, where they coordinate, control and monitor the operation of the electrical power system. TSOs are obliged to provide non-discriminatory transmission access to electricity generators and customers. TSOs can by of two types:Independent System Operators (ISOs) and Regional Transmission Organizations (RTOs). The former operate within a single state and the latter cover wider areas crossing state borders.[citation needed]

In 2009 there were four RTOs in the U.S.:[citation needed]

There are also three ISOs:

The three major and two minor NERC Interconnections, and the nine NERC Regional Reliability Councils.

RTOs are similar, but not identical to the nine Regional Reliability Councils associated in the North American Electric Reliability Corporation, a non-profit entity that is in charge of improving the reliability and security of the bulk power system in the U.S., Canada and the northern part of Baja California in Mexico. The members of the Regional Reliability Councils include private, public and cooperative utilities, power marketers and final customers. The Regional Reliability Councils are:

The FERC distinguishes between 10 power markets in the U.S., including the seven for which RTOs have been established, well as:

  • Northwest
  • Southwest (covering Arizona, most of New Mexico and Colorado)
  • Southeast[30]

ISOs and RTOs were established in the 1990s when states and regions established wholesale competition for electricity.

Distribution[edit]

About 75% of electricity sales to final customers are undertaken by private utilities, with the remainder being sold by municipal utilities and cooperatives.

Economic and financial aspects[edit]

Tariffs and affordability[edit]

In 2008 the average electricity tariff in the U.S. was 9.82 cents/kWh, up from 6.9 cents/kWh in 1995. Residential tariffs were somewhat higher at 11.36 cents/kWh, while commercial tariffs stood at 10.28 cents/kWh and industrial tariffs at 7.01 cents/kWh.[3] The cost of supplying high-voltage power to high-volume industrial customers is lower than the cost of providing low-voltage (110 V) power to residential and commercial customers.

In 2006-07 commercial electricity tariffs in the U.S. (9.28 cents/kWh) were higher than in Australia (7.1 cents/kWh), Canada (6.18 cents/kWh) that relies mainly on hydropower or in France (8.54 cents/kWh) that relies heavily on nuclear power, but lower than in Germany (13.16 cents/kWh), Italy (15.74 cents/kWh) or the UK (11.16 cents/kWh) that all rely to a larger degree on fossil fuels, all compared at purchasing power parity.[31]

Residential tariffs vary significantly between states from 6.7 cents/kWh in West Virginia to 24.1 cents/kWh in Hawaii. An important factor that influences tariff levels is the mix of energy sources used in power generation. For example, access to cheap federal power from hydropower plants contributes to low electricity tariffs in some states.

Average residential electricity consumption in the U.S. was 936 kWh/month per in 2007, and the average bill was US$ 100/month. Average residential consumption varies considerably between states from 530 kWh/month in Maine to 1344 kWh/month in Tennessee. Factors that influence residential energy consumption are climate, tariffs and efforts to promote energy conservation.

Revenues[edit]

Total revenue from the sale of electricity in 2008 was US$344bn, including US$148bn from residential customers, US$129bn from commercial customers and US$66bn from industrial customers.[32] Many large industries self-generate electricity and their electricity consumption thus is not included in these figures.

Investment[edit]

Financing[edit]

Most investments in the U.S. electricity sector are financed by private companies through debt and equity. However, some investments are indirectly financed by taxpayers through various subsidies.

Subsidies and tax incentives[edit]

There is a large array of subsidies in the U.S. electricity sector ranging from various forms of tax incentives to subsidies for research and development, feed-in tariffs for renewable energy and support to low-income households to pay their electric bills. Some subsidies are available throughout the U.S., while others are only available in some states.

Tax incentives include federal and state tax deductions and tax breaks. Tax incentives can be directed at consumers, such as for the purchase of energy-efficient appliances or for solar energy systems, small wind systems, geothermal heat pumps, and residential fuel cell and microturbine systems.[33] Tax incentives can also be directed at electricity producers, in particular for renewable energy.

The Low Income Home Energy Assistance Program (LIHEAP) received federal funding of $5.1 billion in Fiscal Year 2009.[34] It is funded mainly by the federal government through the U.S. Department of Health and Human Services, Administration for Children and Families, and is administered by states and territories. While some of its funding is for fuel for heating, some is also used to cover electricity bills for both heating and cooling.

In April, 2009, 11 U.S. state legislatures were considering adopting feed-in tariffs as a complement to their renewable electricity mandates.[35]

See also[edit]

References[edit]

  1. ^ a b Electric Trade in the United States 1996
  2. ^ Existing Capacity by Energy Source
  3. ^ a b http://www.eia.doe.gov/cneaf/electricity/epm/table5_3.html Average Retail Price of Electricity to Ultimate Customers: Total by End-Use Sector
  4. ^ Power Engineering International:GLOBAL ELECTRICITY PRICING: Ups and downs of global electricity prices
  5. ^ [1] retrieved 2014-1-17
  6. ^ [2] retrieved 2014-1-17
  7. ^ 2012 Population retrieved 2014-1-17
  8. ^ Existing Capacity
  9. ^ Import/Export
  10. ^ Total Electric Power Summary
  11. ^ [3] retrieved 2014-1-15
  12. ^ http://www.eia.doe.gov/cneaf/electricity/epa/epat2p4.html Planned Nameplate Capacity Additions from New Generators, by Energy Source
  13. ^ "The Daily Sentinel." Commission, City support NuStart. Retrieved on December 1, 2006
  14. ^ "US energy bill favors new build reactors, new technology". Nuclear Engineering International. 12 August 2005. Retrieved 2007-12-26. 
  15. ^ Michael Grunwald and Juliet Eilperin (July 30, 2005). "Energy Bill Raises Fears About Pollution, Fraud Critics Point to Perks for Industry". Washington Post. Retrieved 2007-12-26. 
  16. ^ Combined License Applications for New Reactors
  17. ^ "Nuclear power: Fracked off: Thanks to cheap natural gas, America’s nuclear renaissance is on hold". The Economist. June 1, 2013. Retrieved May 31, 2013. 
  18. ^ http://apps1.eere.energy.gov/news/news_detail.cfm/news_id=12475
  19. ^ Remarks of President Barack Obama – Address to Joint Session of Congress
  20. ^ Renewable Energy Tops 10% of U.S. Energy Production
  21. ^ Tankersley, Jim (April 3, 2009). "Wind turbines could more than meet U.S. electricity needs, report says". Los Angeles Times. 
  22. ^ http://www1.eere.energy.gov/windandhydro/pdfs/1_overview-demeo.pdf
  23. ^ http://www.networkworld.com/community/node/27745
  24. ^ http://www.eesi.org/072508_Wind_Energy_Supply
  25. ^ SEGS I, II, III, IV, V, VI, VII, VIII & IX
  26. ^ Nellis activates Nations largest PV Array
  27. ^ International Energy Agency:Energy Policies of IEA Countries - the United States of America- 2007 Review
  28. ^ Timothy J. Brennan, Karen L. Palmer, Salvador A. Martinez:Alternating Currents.Electricity Markets and Public Policy, Resources for the Future, Washington D.C., 2002, p. 26-32
  29. ^ "Electricity Deregulation Map of the United States". Electricity Local. Retrieved 2014-04-11. 
  30. ^ FERC:Electric Power Markets: National Overview
  31. ^ NUS Consulting Survey Group’s International Electricity Report and Cost Survey 2006-2007, quoted in Power Engineering International, July 2007:GLOBAL ELECTRICITY PRICING: Ups and downs of global electricity prices
  32. ^ http://www.eia.doe.gov/cneaf/electricity/epm/table5_2.html Revenue from Retail Sales of Electricity to Ultimate Customers: Total by End-Use Sector
  33. ^ Department of Energy:Consumer Energy Tax Incentives
  34. ^ Department of Health and Human Services:LIHEAP Clearinghouse
  35. ^ Transatlantic Climate Policy Group: Feed-in Tariffs in America: Driving the Economy with Renewable Energy Policy that Works, accessed on April 8, 2009

External links[edit]