Electricity
Electricity Demand
In all scenarios considered in this analysis, electricity demand increases significantly over time, representing a fundamental departure from recent history (Figure 30). Over roughly the past 20 years, growing service demands in the buildings and industrial sectors have been offset by efficiency improvements, leading to essentially zero growth in total electricity demand. Going forward, emerging trends including electrification of vehicles and other end-uses, data center services, and potential demand for hydrogen and other e-fuels all contribute to growing demand, offset by continued efficiency improvements in both existing and emerging end-uses. While some of the current scenarios explicitly consider uncertainty in data center load growth, the extent of electric vehicle adoption is largely similar across scenarios. This results indicates that the economics of EV adoption are less sensitive to the parameters varied in this analysis, but adoption rates are nonetheless uncertain, as are trends in electric vehicle efficiency (for example, see 3002030215).
On the other hand, the extent of electrification in buildings and industry, and especially demand for electrolytic hydrogen, are sensitive to the parameters varied in the current scenarios (Figure 31). With higher fuel costs, more limited bioenergy, and other restrictions, higher shares of building and industrial energy is electrified or met with electrolytic hydrogen (i.e. indirect electrification). In the scenarios with no CCS, hydrogen from electrolysis plays a much larger role as both a direct substitute to conventional fuels and an input to synthetic hydrocarbon fuels. In these scenarios annual electricity demand reaches nearly 10,000 TWh. As shown in the range in Figure 30, electrolysis deployment leads to increased deployment in the 2035 timeframe due to the 45V clean hydrogen production subsidy, although demand declines afterwards once the subsidy period expires. For more information about these dynamics, see 3002028407.
Electricity Generation and Capacity
Electric generation (Figure 32) and capacity (Figure 33) increase in all scenarios to meet growing demand, but the technology mix varies across scenarios. In the Reference 1.0 scenario, most new demand is met with an expansion of natural gas combined cycle. Under the updated reference scenarios, IRA incentives and new EPA rules drive increased deployment of wind and solar displacing new gas generation. Nonetheless, these scenarios still include increased investment in gas capacity and storage, with similar levels of firm capacity despite the increased share of generation from variable renewables. In the net-zero scenarios, the key difference in the 2050 generation mix relative to the reference scenarios is the replacement of conventional gas with low-carbon baseload power from gas with carbon capture and nuclear, with the balance between these resources and renewables sensitive to relative technology costs. However, a key role remains for conventional gas capacity across all scenarios to provide firm balancing power in periods with renewable droughts. The optimal mix of firm capacity includes NGCC, conventional combustion turbines (which can run on either fossil or renewable natural gas), and flex-fuel peaking units capable of burning a variety of low-carbon fuels including renewable diesel and hydrogen. These resources operate at very low capacity factors, with some potentially not running in a typical year and providing only reserve capacity. This portfolio of dispatchable firm capacity complements a portfolio of storage technologies, including both lithium ion for diurnal cycling and bulk storage for longer duration cycles. A portfolio of storage and dispatchable peaking capacity intended to operate infrequently (i.e. with low capital costs and potentially higher variable fuel costs) is a crucial complement to variable renewables and low-carbon baseload power (i.e. with higher capital costs and higher capacity factors) to ensure the reliability of net-zero electricity systems.
Figure 34 highlights the sensitivity of new nuclear deployment to scenario assumptions. With reference nuclear capital costs, new nuclear is only deployed in net-zero scenarios with either high gas price or restriction on CCS (e.g. carbon-free rather than net-zero). With optimistic costs, new nuclear is deployed across a wider range of net-zero scenarios, including the Opt-Tech (with low gas price). Maximal deployment of new nuclear is seen in the case with optimistic nuclear and electrolysis and restrictions on biomass and CCS.