Roughly half of the electricity generated in the United States is fueled with coal, according to the U.S. Energy Information Administration (EIA). Natural gas fuels approximately 20 percent of electric power generation, with nuclear, oil and hydropower making up most of the remainder.
Because of its many environmental and economic benefits, natural gas has become the fuel of choice for new electricity generation, especially since demand for electricity is increasing and some nuclear and aging fossil fuel plants face retirement.
Gas-fired combined-cycle technology has been the overwhelming choice for these new generating plants over the past decade. Combined-cycle plants offer extremely high efficiency, clean operation and low capital costs.
EIA projects the greatest increase in natural gas demand in the next 20 years will be for electricity generation (see pages 75–85 for more on natural gas demand). However, the extreme reliance on natural gas for new electricity generation capacity, coupled with serious constraints on all new potential sources of natural gas supply—onshore and offshore domestic supplies (see pages 55 and 57), LNG (see page 81), and Alaskan gas (see page 79)—has significantly contributed to higher and more volatile natural gas prices.
The benefits of increasing the amount of electricity generated with natural gas include cleaner air and water, more efficient use of energy resources and less dependence on imported oil. However, there is a role for many energy forms and fuels in providing electricity. Given the growing demand for electricity, diversity in the fuel mix is critical. AGA supports this generating diversity, particularly for clean and efficient technologies such as nuclear power, Integrated Gasification Combined Cycle (IGCC) technology, and various solar and renewable options. Most of the natural gas used by electric power plants is transported to them by interstate pipelines, not by local natural gas utilities.
Additional Information: U.S. Energy Information Administration (www.eia.doe.gov); Edison Electric Institute (www.eei.org); Electric Power Supply Association (www.epsa.org)
AGA Contact: Richard Meyer, Energy Analyst, (202) 824-7134