ISO-NE projects slow growth in electricity demand

New England's electric grid operator predicts slow growth in annual energy usage in the region over the next decade, with slightly quicker growth in peak demand.

A Maine power plant -- the ecomaine Waste-to-Energy plant in Portland, Maine.

ISO New England, Inc. develops an annual long-term load forecast using factors including state and regional economic forecasts and 40 years of weather history.  Its most recent baseline forecast projects a compound annual growth rate of 1.0% in total energy usage in New England from 2015 to 2024.  For 2015, ISO-NE projects 138,745 gigawatt-hours (GWh) of load, growing to 152,280 GWh in 2024.

ISO-NE's forecast also projects future peak demand, a measure of the highest amount of electricity used in a single hour in New England.  Often, peak demand drives the need for constructing and maintaining power plants and transmission lines (and energy efficiency investments).  According to the latest ISO-NE forecast, New England's peak electricity demand is projected to rise by a compound annual growth rate of 1.3%, from 28,395 MW this year to 31,905 MW in 2024.

These baseline projections for future peak demand and energy usage take into account load reductions that can be expected from future installations of distributed solar photovoltaic facilities.  ISO-NE has prepared a separate Distributed Generation Forecast to estimate the load-reducing effects of distributed solar facilities developed as a result of state policy goals.

ISO-NE's baseline projections do not account for significant energy-efficiency savings, neither those committed through the region’s three-year Forward Capacity Market (FCM) nor future savings that can be expected beyond the FCM timeframe.

Report projects modest need for electric generation capacity growth

The U.S. Energy Information Administration has projected that 351 gigawatts of new electric generating capacity will be added to the U.S. grid between 2013 and 2040.  This projected new capacity, most of which EIA expects to be fueled by natural gas, will replace older power plants as they retire, as well as modestly increasing the country's net installed capacity.

EIA's forecast implies a growth rate well below recent annual levels observed.  Under EIA's projection, capacity additions through 2016 will average 16 GW per year.  But from 2017 through 2022, EIA expects additions of less than 9 GW per year as the existing generating fleet will be sufficient to meet expected demand growth in most regions.  From 2025 to 2040, annual additions increase to an average 14 GW per year, but remain below recent levels.

EIA expects that natural gas will be the primary fuel source for the projected added capacity, accounting for 73% of capacity additions in the reference case (or 255 GW).

Renewables will account for 24% of the new capacity (or 83 MW).  Of renewable capacity additions, 39 GW are solar photovoltaic (PV) systems (60% of which are rooftop installations).  Another 28 GW are wind, most of which will occur by 2015 to qualify for federal renewable energy production tax credits).

New nuclear capacity will total about 3% (or 10 GW), including 6 GW of plants currently under construction and 4 GW projected after 2027.

EIA also projects that 1% of capacity additions (or less than 3 GW) will come from coal, with more than 80% of that total currently under construction.  EIA notes that federal and state environmental regulations and uncertainty about future limits on greenhouse gas emissions reduce the attractiveness and economic merits of coal-fired plants.

Like any forecast, EIA's projections rest upon a series of assumptions.  Under alternative cases, we might experience actual capacity additions that differ from EIA's forecasts.  Nevertheless, the EIA Annual Energy Outlook 2014 offers a glimpse of changes to the portfolio composing our energy mix may come in the next decades.