Comparing US Energy Growth in 2012

2012 was a remarkable year for energy in the US, with domestic output of oil, gas, wind and solar energy all advancing strongly.  This was the result of an unfolding revolution in unconventional oil and gas, along with federal, state and local incentives and regulations promoting renewable energy.  Yet despite extensive media coverage and vocal constituencies for each of these energy sources, I haven't seen any recent efforts to compare their respective contributions to US energy supplies. 

That may be due in part to the confusing array of energy units involved. It's daunting to match up oil in 42-gallon barrels (bbl), gas in cubic feet or British Thermal Units (BTUs), and wind and solar in kilowatts (kW) or Megawatts (MW) of capacity, or kilowatt-hours (kWh) or Megawatt-hours (MWh) of actual generation.  Conversion factors among these various units are easy to find on the internet.  However,  meaningful equivalencies are complicated by important distinctions between liquid or gaseous fuels and grid electricity, and the fact that these energy sources compete with each other only in specific situations.

For purposes of comparison, since wind and solar routinely compete with gas-fired generation, let's assume that the output of wind turbines and solar panels can be equated to the power from a natural gas turbine with an effective heat rate of 7,000 BTU/kWh.  That recognizes the efficiency losses in fossil generation and the premium value of electricity to end users.  Gas and gas-equivalent renewables can be further equated to oil using the standard conversion factor of 5.8 million BTU/bbl.  So even though wind and solar rarely compete with oil in the real world, because less than 0.6% of US electricity is now generated from petroleum products or byproducts, we can still assess their relative contributions to America's energy economy in familiar terms.  Please note that Energy Information Administration (EIA) data on production and generation for the full year won't be available until the end of the month, so the figures below are based on published data for the most recent available 12-month periods.

Through November oil production posted impressive gains last year , as noted several times in the presidential campaign and debates. Thanks to surging tight oil (shale oil) production in North Dakota, Texas and elsewhere, US crude oil output increased by 748,000 bbl/day on a December-November basis, or around 13%. In fact, November's production of 6.9 million bbl/day was the highest for any month since November 1993. Recent production looks even higher.

Natural gas also grew rapidly in 2012, with "marketed gas production", including gas liquids like ethane, propane and butane, growing by 1.4 trillion cubic feet for the 12 months ending in November 2012, compared to the same period a year earlier.  That's equivalent to adding at least 650,000 bbl/day of oil.  US gas production appears to have set an all-time record last October.

Wind power also had a banner year, with developers installing a record 13,124 MW of new capacity in the US.   Much of that growth was attributable to companies accelerating projects in anticipation of the scheduled December 31, 2012 expiration of the federal Production Tax Credit, or PTC, the main US tax incentive for wind energy. As it turned out, the Congress extended the PTC for another year as part of the recent "fiscal cliff" deal. On the basis of the most recent 12-month comparisons from the EIA, US wind farms generated 18 billion kWh more last year than the previous year.  That equates to 126 billion cubic feet (BCF) of natural gas, or around 59,000 bbl/day of oil.

That brings us to solar, which was on pace to set a record of around 3,200 MW of new installations in the US in 2012.  On a December-November basis new solar panels added roughly 2.5 billion kWh of reported generation last year, equivalent to 17 BCF of gas or 8,100 bbl/day of oil. This probably doesn't capture the contribution of all grid-independent installations, but it's unlikely to be off by more than a factor of 2.

Although the above chart shows that wind and solar power have a long way to go to match the recent energy contributions of new fossil fuel production, both have earned credibility by advancing to the point of being measurable on the same scale as oil and gas.  Both also contribute to reducing emissions. At the same time, the significance of developments in US unconventional hydrocarbons leaps off the page.  In just the last year, for the second year in a row, shale gas has added domestic energy production roughly equivalent to the entire current output of all US non-hydro renewable electricity generation: wind, solar, geothermal, biomass and waste power. Tight oil added a like amount in 2012.  We're clearly in the midst of an energy transformation, but it doesn't much resemble the one that was anticipated just a few years ago.  

This is an updated version of a posting that was previously published on the website of Pacific Energy Development Corporation.