Power Sector Evolution
The U.S. electric power sector has changed significantly over the past several decades, and significant changes are likely to continue. Electricity generation technologies are changing as older generation sources retire and new sources, including gas, wind, solar, and battery storage, come online. The addition of pollution control technologies to comply with various Clean Air Act regulations together with market forces and advances in cleaner generation technologies have resulted in reduced air emissions from the power sector over the last several decades.
Electricity demand levels are a significant driver of emissions. While coming off a decade of relatively low growth, the power sector is showing signs of renewed and higher growth in demand levels. This renewed demand is likely to continue due to drivers like electrification, data centers, and increased domestic manufacturing. Any emissions corresponding to increased demand will depend on the type of sources generating the electricity, the pollution controls used across the transmission system, and the rate at which the demand growth occurs.
This page focuses on power sector trends over the past two to three decades. For information about projections of future trends and documentation of EPA’s power sector modeling resources and regulatory applications, visit EPA’s Power Sector Modeling.
On this page:
- Power Sector Emission Trends
- Electricity Demand Trends
- Transmission and Distribution Trends
- Power Sector Trends
- Learn More
Power Sector Emissions Have Decreased
Over the past decades, the U.S. power sector has been successful in reducing emissions from key pollutants even during periods of increased electricity demand like the 1990s and early 2000s. Reduced emissions are attributed to the power sector’s increased deployment of pollution controls, decreased use of coal (the most emission-intensive electricity source), and increased use of lower-emitting electricity sources like natural gas and renewables. Pollution control retrofits to coal plants increased rapidly between 2000 and 2023. As of 2023, nearly 90% of all coal capacity featured one or more pollution control technologies in the form of scrubbers and selective catalytic reduction. Overlapping and continuing after this period of pollution control retrofits, the increased deployment of natural gas and renewables and retirements of coal plants further drove down emissions.
Over the past three decades, sulfur dioxide (SO2) and nitrogen oxides (NOX) emissions have fallen significantly, and carbon dioxide (CO2) emissions have decreased as well, although to a lesser degree. Notably, these emission reductions occurred even during periods of increased electricity demand throughout the 1990s and early 2000s.
The power sector is still a significant emissions source in the U.S., contributing approximately 44% of SO2, 11% of NOX and 30% of CO2 emissions. The power sector is the largest stationary source of greenhouse gases (GHG), emitting 25% of overall domestic GHG emissions in 2022.
Hover over the following chart to see more details on the change in emissions as it relates to the change in total generation.
Emissions reductions under EPA's power sector programs and market drivers have improved human health and environmental outcomes.
Electricity Demand Has Increased in Recent Years
After years of significant growth in the 1990s and early 2000s, total electricity demand held relatively steady for more than a decade. Initiatives such as EPA’s Energy Star Program and other demand-side energy efficiency measures at the federal and local levels helped to temper electricity demand growth during this period.
However, recent years of data as well as forecasts suggest electricity demand growth in the coming decades. Utilities and grid operators work together to generate and deliver electricity to meet consumer demand. Energy efficiency, battery storage, and grid modernization are approaches to manage this increased demand.
Transmission Systems Are Modernizing
Power plants and other utility-scale electricity sources produce electricity and distribute it through high-voltage transmission lines to substations, where power then decreases and is delivered to customers through lower voltage distribution lines. Visit U.S. Energy Information Agency’s “Electricity explained: How electricity is delivered to customers” for more information.
The management of these transmission and distribution networks, along with their electricity sources, requires a complex array of utilities, merchant transmission companies, industry parties, and regulatory authorities. In some areas, the operation of the transmission system is under the control of a single regional operator. In other areas, individual utilities regionally coordinate their generation, transmission, and distribution systems to balance the system across their respective service territories.
As the fleet changes, transmission systems must also change, and regional transmission planning processes are adapting to manage the energy transition. Over the past two decades, there have been significant developments in transmission infrastructure and there are an increasing number of projects under construction or in planning for construction over the next 10 years.
Turnover in the Power Sector Fleet Continues
Changes in technology costs, fuel costs, and demand for electricity has led to a changing fleet of generators providing electricity. As new electricity generating technologies decrease in cost, older and more expensive energy technologies move further down the dispatch order (i.e., the order in which sources turn on to generate electricity). This leads to less use for more expensive sources, meaning that their actual generation decreases compared to the source’s full capacity.
For example, the cost of renewable electricity generated by wind and solar technology has decreased significantly over the past two decades, becoming competitive with existing coal and gas generation. In addition to decreased construction costs, the total operation and maintenance costs of renewable sources are low compared to fossil fuel sources, particularly coal-fired sources. This is because coal-fired sources have fuel costs in addition to higher operation and maintenance costs. Between 2010 and 2023, the average unsubsidized cost of wind electricity fell approximately 70% and the average unsubsidized cost of solar electricity fell approximately 85%. During this time, wind and solar generation grew significantly, with renewable electricity surpassing coal-fired generation for the first time in 2022.
As of 2023, coal generation is one-third of its peak level in 2007, while natural gas generation has more than doubled and wind and solar generation have greatly expanded, together increasing seven-fold since 2007. Renewable electricity is currently the fastest growing electricity source in the U.S., with solar and wind dominating construction of new grid capacity. Voluntary programs like the EPA’s Green Power Partnership are further incentivizing organizations to choose renewable electricity through approaches like credible benchmarking, procurement guidance, and public recognition.
Trends related to growth in types of electricity sources vary significantly across the U.S. The charts below show the evolution of these sources nationally, along with nationwide and statewide variation and change in the total energy mix.
The mix of electricity sources varies significantly across the U.S, however, many states have experienced fuel type changes like those shown in the chart above.
To learn more about the U.S. electricity mix, visit Emissions & Generation Resource Integrated Database (eGRID).
Power Sector Trends: Coal
Coal-fired electricity is an emissions-intensive energy technology in the U.S. power sector. However, the electricity sourced by coal in the power sector has decreased steadily since 2007. Most coal-fired power plants operating in today’s fleet were constructed half a century ago. With age, these plants are increasingly expensive to run and in time, utilities may become financially motivated to deploy cheaper renewable electricity and natural gas. Coal construction has significantly declined since the 1970s and 1980s, with no utility-scale coal construction occurring in the past decade. The following trends reflect the decline in coal-fired generation over the past two decades:
- Few or no new coal-fired sources.
- A decrease in use of aging coal-fired sources.
- An increase in retirements of coal-fired sources.
In addition to the lack of construction, the use of existing coal plants is also decreasing. Capacity factors describe the ratio of actual generation compared to potential capacity as a measure of use. Capacity factors decline on average as aging coal sources transition from baseload power providers to intermediate power providers. Aging coal-fired sources that run less consistently require higher heat rates to warm up, particularly after the first 20 years of their lifespans. In turn, the emission rates of these older sources increase, and their efficiencies decrease compared to newer sources that use lower emitting fuels and improved technology.
Retirement of coal sources has accelerated in the past decade. The total capacity of annual coal retirements increased, with annual retirements after 2010 anywhere from four to fourteen times higher than prior levels. At similar rates, the annual share of coal retirements increased compared to the retirements of all other types of electricity sources within the U.S. power sector. Coal retirement is also happening at an increasing rate compared to other electricity sources like natural gas, renewables, or even nuclear sources.
The lack of new coal capacity paired with the increase in coal retirements has resulted in an overall aging of coal sources across the U.S. Typically, maintenance costs increase, and efficiencies decrease as aging equipment degrades, further hindering the cost competitiveness of older coal sources compared to newer efficient technologies. The average age that coal sources retire is around 53 years, which has remained relatively consistent over the past two decades. Meanwhile, the average operating age has increased, and half of the currently operating coal capacity comes from sources within the age range for retirement.
A map of announced power plant retirements tracked by EIA is available on Power Plants and Neighboring Communities.
Power Sector Trends: Natural Gas
The build out of natural gas-fired electricity sources over the past two decades has played a key role in emission reductions in the U.S. Advances in hydraulic fracturing (i.e., fracking) and horizontal drilling techniques have opened new regions of the U.S. to natural gas exploration. During this time, natural gas generation increased significantly. While this coincides with a slight increase in electricity demand, most of natural gas’ growth is a result of decreased coal-fired generation. Natural gas generation surpassed coal-fired generation in 2016 and has continued to grow.
Most natural gas consumption in the electric power sector comes from one of two configurations: natural gas combined cycle (NGCC) or simple cycle natural gas combustion turbines (NGCT). NGCC sources have a combustion turbine and a heat recovery steam generator which run from a sole source of heat, making them more efficient in producing power. Alternatively, simple cycle combustion turbines produce electricity without a heat recovery steam cycle. NGCC sources typically run more often, while NGCTs are less efficient and typically run only for peak electricity demand. NGCC sources were most of the new capacity added over the past two decades and have increased in the share of new builds since 2000. As of 2023, NGCC technology comprised most (59%) of the total natural gas fleet and 85% of total natural gas generation.
As the production of natural gas has increased, the price of natural gas has decreased accordingly. The following chart shows the Henry Hub price, which provides a reliable benchmark of natural gas prices due to its expansive market area.
Power Sector Trends: Nuclear
Nuclear power plants do not produce emissions while they are operating, and they have provided a steady amount of electricity to the U.S. power sector over the past two decades. Nuclear generation comprised 19 percent of U.S. electricity generation as of 2023, with a slight decline in recent years due to retirements in an aging nuclear fleet. However, retirement trends may reverse in upcoming years due to recent market and policy drivers. Recently, the first new U.S. nuclear reactor in almost two decades began operation, and another facility expanded its capacity. Newly created financial assistance for existing nuclear facilities along with renewed demand growth have delayed some previously planned retirements and have led other retired nuclear facilities to plan for restoration and restart of service.
Power Sector Trends: Renewable Electricity
Renewable electricity generation, including wind, solar, hydroelectric, geothermal, and biomass/waste, has nearly tripled over the past two decades. Wind and solar energy drove the growth in renewable generation in this period. In 2022, renewables generated more electricity than coal-fired sources for the first time.
The top three renewable sources by capacity in 2023 were:
The upfront capital costs to build wind and solar facilities are the main costs incurred by these technologies, since their operational and maintenance costs are much lower than other energy technologies. These upfront capital costs have fallen over time. As of 2022, the average unsubsidized cost of energy for land-based wind had decreased 70% since 1999. The average unsubsidized cost for utility-scale solar photovoltaics has also fallen significantly, by 83% since 2010.
The total costs of renewable sources during the duration of their operation are significantly lower than fossil fuel sources, particularly coal-fired sources that have fuel costs in addition to high operation and maintenance costs. Thus, renewables are often ahead of fossil fuel sources in the dispatch order (i.e., the order in which sources turn on to generate electricity based on the price to generate electricity). As low-cost renewable electricity technologies come online, they push other more expensive energy technologies further down the dispatch order.
Power Sector Trends: Energy Storage
Energy storage technologies like pumped hydroelectric storage and battery storage help to integrate variable renewable generation and energy demand peaks by storing energy for times when it is most needed. In 2023, about 42% of energy storage capacity came from battery storage and the remaining from pumped hydroelectric storage.
Battery storage typically charges during periods when power prices are low and discharges during periods when power prices are high. This helps to decrease overall emissions, lower peak prices, and improve system reliability. Low-emitting resources like wind and solar tend to generate electricity during lower demand, lower priced hours. Without batteries, higher emitting and higher cost fossil resources like natural gas and coal are dispatched to a greater extent during periods of peak demand. Incorporating batteries into the grid lowers peak prices by storing lower priced renewable electricity generated during off-peak hours and reducing demand for higher emitting and higher cost sources. This in turn reduces overall system emissions. Researchers at the National Renewable Energy Laboratory (NREL) found that across a range of U.S. markets, battery storage and renewable generation sources played an important role in managing summer 2024 peak demands.
Starting in 2021, battery storage established itself as a rapidly emerging energy technology in the U.S. power sector. That year, the construction of battery storage exponentially increased in capacity compared to all other years over the past two decades. This rate of battery technology deployment has been steadily increasing since then, and battery storage represented over 37 GW of capacity in 2023. Battery capacity within the grid will likely increase significantly in coming years as technology costs decrease.
Learn More
Stay informed by checking back for periodic updates to this page on the evolution of the power sector and trends of the past two decades. Check out Power Sector Modeling to see how EPA projects and analyzes forecasts of environmental policies on the power sector. Learn more about how source emissions impact human health and the environment, and EPA’s Clean Air Power Sector Programs.