The industrial sector will lead a boost in US retail sales of electricity in 2021, according to a forecast from the EIA. US retail electricity sales will jump 2.8% this year, help in large part by a 5.1% increase in sales to the industrial sector. Commercial entities are also expected to boost their spending on electricity, though at a slower rate of 2.1%; this slow growth is due to many employees continuing to work from home.
The increase in economic activity, and the easing of the effects of Covid-19, are contributing to rising energy use. However, the outlook remains subject to higher levels of uncertainty due to the ongoing economic recovery from the pandemic.
Renewable energy should contribute a greater share of US electricity generation through 2022, reaching a 23% share, up from 20% in 2020. It is expected that 2022 will be the first year that growth in utility solar capacity will outpace wind capacity growth: about 50 gigawatts of solar and wind capacity is scheduled to come online in the US during the next 18 months.
The extreme drought in the Northwest and California is straining water reserves, which will likely cause a significant decrease — perhaps as much as 11% — in electricity from hydropower this year, EIA expects.
In its Annual Energy Outlook 2021 released in February, the EIA projected that the share of renewables in the US electricity generation mix will increase from 21% in 2020 to 42% in 2050. Wind and solar generation are responsible for most of that growth. The renewable share is projected to increase as nuclear and coal-fired generation decrease and the natural gas-fired generation share remains relatively constant.
By 2030, renewables will collectively surpass natural gas to be the predominant source of generation in the US. Solar electric generation (which includes photovoltaic and thermal technologies and both small-scale and utility-scale installations) will surpass wind energy by 2040 as the largest source of renewable generation in the US.