Energy is the lifeblood of modern society. Without it we couldn't power our vehicles or charge our gadgets, keep our medical devices running or our food from spoiling. There's a reason energy, or a lack thereof, is one of the most terrifying parts of post-apocalyptic zombie films.
While we've benefited mightily from industrializing our economy and building a patchwork system of transmission lines we call the national grid, today we know we need to diversify away from our overreliance on fossil fuels and toward cleaner energy sources. We're making tremendous progress, but not everything is as it seems. These five energy stats will blow you away while pretty clearly making that point.
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1. Wind power supplies 5.6% of American electricity
Last year wind power generated an estimated 226 billion kWh of electricity in the United States. That represents growth of 3,670% since 2000, when the top non-hydro renewable energy source sent just 6 billion kWh of electricity to the grid. That's remarkable progress in a period of less than two decades. How'd it happen?
Government subsidies helped to smooth out investments from utilities and power generators, which have invested $143 billion into wind power in the last decade alone. The United States has grown installed wind generating capacity from 11.4 gigawatts (GW) to 82 GW in that time -- but it's just getting started.
The U.S. Energy Information Administration (EIA) projects installed wind capacity will rise to 102 GW by the end of 2018. That means wind power could provide more than 7% of all American electricity by the end of the decade.
NextEra Energy (NYSE: NEE) has been a huge driver of this overnight transition. In fact, it's the top green utility in the country and fourth-largest in the world. Today, the company's portfolio boasts 13.8 GW of wind power. It plans to invest another $3.4 billion in wind power through the end of 2019 -- its largest commitment to any energy source.
2. Illinois almost cut clean energy production by 70%
Last year Illinois almost allowed Exelon (NYSE: EXC) to close two nuclear power facilities that generated 12.2% of the state's total electricity -- and nearly 70% of the state's total clean energy generation. It was a remarkable showdown with huge consequences, but the power generator prevailed in the end.
How did we even arrive at that point? Exelon contested that the state's Renewable Portfolio Standard was misguided, as it only provided subsidies and incentives for, well, renewable energy sources. If the goal is to provide cleaner air and reduce carbon emissions, then states should prioritize clean energy, not just renewable energy, the company argued. You may disagree, but Illinois should have understood that better than any state in the country: it generates 48% of its electricity from nuclear energy.
After Exelon threatened to shut two nuclear facilities in the state, politicians agreed at the last minute to provide Zero Emission Credits of $0.0165 per kWh of generation. It will be enough to keep the facilities online for another 10 years at least -- and may provide a blueprint for other states to follow. Indeed, Exelon is trying a similar tactic in Pennsylvania regarding its infamous Three Mile Island nuclear power plant, which it "plans to close."
3. Coal is making a comeback in 2017
Remember how coal was getting its breakfast, lunch, and dinner eaten by natural gas? The numbers proved that out: In 2016, natural gas stole the top spot by generating 33.8% of the nation's power, while coal provided just 30.4%.
But it's 2017, and coal is once again the top electricity source in America. Through the first five months of the year coal has generated 5% more electricity than natural gas. What's going on?
This was actually expected. Increasing natural gas prices this year have forced generators in certain regions to idle natural gas plants and switch back to coal, but only briefly. At the end of the day, coal power is going the way of the dodo. The energy source boasts some of the dirtiest and (most importantly) oldest power generation stations in the country, which means they'll continue to be retired at a fast pace. Meanwhile, a flood of super-efficient natural gas plants are coming online in the next two years, which will put the final few nails in coal's coffin and ake a repeat of this situation unlikely in the future.
4. Nuclear production is up 5% since 2012
You've probably heard of the dismal state of affairs facing nuclear energy. Five nuclear facilities hosting six reactors have closed since the end of 2012. Several more are expected to close before the end of the decade. That's what makes the following news so surprising: the amount of power generated by the country's remaining 99 nuclear reactors increased nearly 5% from 2012 to 2016.
To be fair, it's a bit of a statistical anomaly. Output dipped for several reasons at the beginning of the current decade. Then again, nuclear generation in 2016 was just 0.2% below 2007 levels. How is that possible after losing 6% of operating reactors?
The timing of planned outages has played a role, but so has one mechanism unique to the nuclear industry: uprates. More specifically, power generators can increase output at nuclear power plants by modifying existing facilities. It may not sound like much, but from 1977 to 2012 the United States increased installed nuclear generating capacity by 6.5 GW using uprates alone -- without installing a single new reactor.
It's a neat trick that can mitigate some of the near-term effects of plant closures, but it won't be enough to stem the expected capacity loss from facilities being taken offline in the years to come.
5. Ethanol is secretly one of America's largest exports
The American ethanol industry is a 16-billion-gallon-per-year juggernaut. However, the nation's gasoline is only legally required to contain 10% ethanol by volume -- called the "Blend Wall" -- and we reach that saturation point at 13.5 billion gallon. Rather than idle facilities or turn away from growth investments, producers such as Green Plains (NASDAQ: GPRE) have gone all-in on an important new revenue stream: exports.
Exports have steadily grown from 400 million gallons in 2010 to 1 billion gallons in 2016 (they hit a record 1.2 billion gallons in 2011 due to a drought in Brazil). Forecasts call for 1.2 billion gallons leaving our shores this year -- perhaps even exceeding the record from 2011. The remaining ethanol produced that doesn't go into fuels or exports goes to storage and other industrial uses.
That has allowed Green Plains, the second-largest ethanol producer in the world, to invest in building long-term business around the opportunity. Last year it exported 20% of its production and announced a 50/50 joint venture to build an export terminal in Texas that will come online in the second half of 2017. When planned expansions are included, it could store up to 1 million barrels of liquids -- roughly one day's worth of ethanol production from the United States.
What does it mean for investors?
As these surprising energy stats demonstrate, things aren't always as they seem. Wind power is cruising along to become a dominant player in the American energy mix, while nuclear energy has held its own despite plant closures. Coal is making a (short-term) comeback, while ethanol is becoming one of the country's best exports. It goes to show that the simple narrative isn't always the reflected by reality.
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