U.S. power generation

The United States accounts for the greatest share of global power generation demand (about 20 percent), and meets its requirements with a diverse portfolio of energy types.

Today, coal supplies about 50 percent of total U.S. power generation requirements, while gas supplies 17 percent. Nuclear has a 22 percent share, but has grown only modestly over the past 15 years. Renewables account for about 6 percent of the mix. From 1980-2005, U.S. demand grew 2.4 percent per year on average, consistent with the rest of the OECD OECD (Organization for Economic Cooperation and Development) Member Countries (30) Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States nations.

Over the outlook period, the demand for particular energy types will reflect comparative cost estimates of new baseload power generation. To illustrate, the chart shows the anticipated cost of new plants in 2020 in cents per kilowatt-hour (kWh), representing a life-cycle cost of electricity leaving the plant, excluding transmission and distribution. The range of each bar reflects different capital investment assumptions as well as the range of fuel prices prevailing in the first half of 2007. In an operating environment without a cost of carbon, coal is the most competitive baseload option with costs averaging just over 5¢ per kWh.

A key area of uncertainty that will influence investments in new power generation capacity is the potential cost of CO₂ emissions. Actual costs will depend on specific regulations in the U.S. and around the world, but the directional impact that such policies may have on the cost of electricity and the competitiveness of various fuels can be illustrated by overlaying a hypothetical cost of CO₂.

With a cost of CO₂ emissions assumed, power generation costs will move higher, reflecting the carbon intensity of the fuel source used. At $30 per tonne of CO₂, coal plants move to about 7¢ per kWh and become significantly disadvantaged. Gas-fired plant costs would also go up, though less than coal. Nuclear would clearly emerge as a strong economic alternative for new baseload capacity. This possibility — along with a diverse uranium resource base, improving economics and safer designs — has led to renewed interest in the development of nuclear power.