After a decade of mostly modest growth, the US economy kicked into a higher gear in 2018. These new conditions rippled through nearly every aspect of the energy sector including overall demand, power generation, project build, energy prices and CO2 emissions. That’s according to a new report — “Sustainable Energy in America Factbook” — by BloombergNEF and the Business Council for Sustainable Energy.

2018 affirmed many of the key trends documented in previous editions of the factbook. But the year also raised questions about whether US energy can continue on a lower-carbon pathway when economic growth is strong but federal policy support is weak.

According to the report, longstanding trends that continued in 2018 include:

• Natural gas boomed. The most new gas-fired power-generating capacity was added in 14 years propelling it to a record 35% of the country’s power generation. At the same time, natural gas production hit record highs.
• Renewables grew in volume and importance, while grid reliability was maintained. Installations of new mostly wind and solar capacity in 2018 hit 19.5GW. Hydropower closely followed by wind are the largest sources of zero-carbon, renewable generation in the US
• Wind is the largest single source of zero-carbon power-generating capacity in the US. Total wind installations are essentially level with nuclear in terms of capacity.
• Coal’s decline continued. Its contribution to overall power generation fell to 27%, the lowest in the post-WWII era. Meanwhile, another 13GW of existing plants announced or completed retirement, the second most in US history.
• The power sector continued to de-carbonize. Renewables + natural gas growth – coal = a less carbon-intensive US power sector. Total electricity consumed in the US rose 2.2% in 2018 while CO2 emissions from power plants rose just 0.6%.
• Energy remained affordable. Households continue to spend record lows of personal income on electricity and natural gas bills. In many major regions, weighted-average retail power prices fell 1-3% though they did rise in some regions.
• US energy jobs grew. The US energy sector employs approximately 6.5 million Americans, up 2 percent in 2017 from 2016 (the most recent data available), with energy efficiency, renewable energy and natural gas sectors employing 3.4 million Americans in 2017.
• The US retains a competitive advantage on industrial power prices. The US is second only to Canada with the lowest industrial electricity prices among the G7 nations.
• The popularity of electric vehicles grew. EVs accounted for only 1.3% of total vehicles sold in the U.S in the fourth quarter of 2017. By third quarter 2018, that had nearly doubled to 2.5%, then hit 3% by the fourth quarter.
• Battery storage costs fell further. Lithium-ion battery prices dropped another 18% year- on-year, boosting both EVs and stationary storage applications and encouraging electric utilities to sign power purchase agreements pairing storage with solar and wind.
• Corporates continued to drive demand for sustainable energy. Retailers, major technology firms, and even an oil major contracted record volumes of renewable power through direct contracts. Others pledged to double energy productivity or to green their vehicle fleets, with electric, fuel cell and renewable natural gas power vehicles.
• States and localities again led the charge on sustainable energy policy-making. California promised to achieve 100% renewables while Nevada, New Jersey and New York also upped the ante on their renewables, efficiency, and battery deployment pledges. Florida agreed to allow third-party PV installers to operate in the state.

Economy Growth and Energy Consumption

The report notes that the US economy in 2018 grew at its fastest pace in five years, posting an annualized GDP expansion rate of 2.9%. For the first time in several years, energy consumption grew at a faster clip than GDP, rising 3.3% over the same time period. Seasonal factors played an important role, as extreme weather boosted demand for both heating and cooling in the buildings sectors. The US set a record for the most “cooling-degree days” (as defined by the Energy Information Administration) since at least 1990 causing Americans to use more air-conditioning to remain comfortable. The number of “heating degree days” bucked a long-term declining trend to hit their highest level since 2014.

Meanwhile, the increase in overall energy use belied slower growth in transportation consumption (up 0.7%), as Americans continued to buy larger, less fuel efficient cars, but vehicle miles traveled leveled off. Electricity demand as measured in terawatt hours grew at a slower pace of 2.2%. In other words, although overall energy productivity declined in 2018, the US continued to grow more productive and efficient in its use of electricity. Even so, the increase was enough to push electricity sales to a projected all-time high of 3,950 terawatt-hours, a 1.2% increase over the previous record set in 2014.

Large Energy Consumers Reduce Footprint

Globally, 158 corporations have now pledged to source 100% of their electricity needs from renewable energy under the RE100 Initiative. According to the report, in the US, corporate interest in clean energy blew through previous records. Large energy buyers signed contracts for 8.6GW of wind and solar, over twice the previous record of 3.4GW contracted in 2015. Procurement reached into new markets, as companies such as Facebook, Google and Walmart worked together with vertically integrated utilities in New Mexico, Georgia and Tennessee (among others) to build new wind and solar projects. New aggregation models also arose, allowing smaller energy buyers like Etsy and Adobe to combine their demand to sign onto an individual project, thereby leveraging economies of scale previously only open to large consumers.

Corporate activity stretched beyond electricity consumption, with pledges to the EP100 campaign — under which they seek to double energy productivity by 2030 — nearly tripling in 2018. The report states that 37 companies, including H&M, Hilton, and Swiss Re, are members of the initiative, up from only 13 in 2017. Additionally, a new campaign called the EV100 garnered 31 corporate pledges. Companies like IKEA, HP and Unilever promised to ramp up integration of electric vehicles into their corporate fleets and to assist employees in transitioning to cleaner transportation.

Finally, back on the electricity delivery side, 2018 saw some key announcements from US utilities regarding sustainable energy. Minneapolis-based Xcel Energy, which operates utilities in eight states, said it would deliver only carbon-free power to all its customers by 2050. Ohio-based AEP, which serves customers in 11 states, said it will cut its CO2 emissions 80% by 2050 (vs. a 2000 baseline).

The 4th Annual Environmental Leader & Energy Manager Conference takes place May 13 – 15, 2019 in Denver. Learn more here.