Energy Industry Spotlight

The Energy Industry in the United States

Overview

The United States is a leader in the production, supply, and consumption of energy. U.S. energy companies produce oil, natural gas, coal, renewable fuels, as well as electricity from clean energy sources, including wind, solar, hydropower, geothermal, and nuclear power. U.S. energy companies further transmit, distribute, and store energy through complex infrastructure networks that are supported by emerging products and services such as smart grid technologies. Growing consumer demand and world-class innovation – combined with a competitive workforce and supply chain capable of building, installing, and servicing all energy technologies – make the United States one of the world’s most attractive markets. According to the International Energy Agency, total investment in the U.S. energy sector was valued at $350 billion in 2018 (the second-largest in the world). That same year, total foreign direct investment in the U.S. industry reached $172.8 billion.

Industry Subsectors

Renewable Energy: The United States is home to a thriving renewable energy industry, with globally competitive firms in all technology subsectors, including the wind, solar, geothermal, hydropower, biomass, and biofuels sectors. Today, the United States has the most geothermal capacity of any country (3.7 GW); has the third-largest bioenergy capacity (14.2 GW); the second-largest wind capacity (97.2 GW); the second-largest hydropower capacity (102.1 GW); and the second-largest solar capacity (67 GW). The Department of Energy estimates that renewable energy has the potential to generate 80 percent of U.S. electricity by 2050, up from almost 20 percent today. In 2019, EY ranked the United States as the second most attractive country for renewable energy investment.

Energy Efficiency: The market for achieving greater energy efficiency in the United States is large and growing. The American Council for an Energy-Efficient Economy (ACEEE) estimates that $83 billion was invested in 2018 on energy efficiency in the United States. Existing policies, such as federal appliance standards, along with other Federal and State policies, and market forces are drivers of energy efficiency in the United States.

Renewable Fuels: With access to abundant natural resources, the pellet and ethanol industries are also increasing their capacity – particularly to serve overseas markets. America’s ethanol industry is the largest and most efficient in the world, incorporating technological innovations to produce over 16 billion gallons of ethanol annually. In addition, the industry is expanding to new markets. In 2018, the U.S. ethanol industry exported an estimated 1.6 billion gallons of ethanol–around 10 percent of its total production–to markets around the world. Investment opportunities also exist for the development of advanced biofuels utilizing new technologies and feedstocks, particularly in the aviation sector. U.S. wood pellet manufacturers can now produce over 13 million metric tons of pellets annually. Much of the production has been added in recent years to export to Europe. In 2018, over 6 million metric tons were exported and new pellet mills have been brought online to meet the growing demand.

Electric Transmission and Distributed Utilities, Smart Grid, and Battery Storage: Energy, environmental, and security needs for the 21st century have accelerated both public and private sector investments in grid modernization and smart grid technologies across the United States. Increased investment in U.S. grid modernization includes reliability enhancement, renewable resources integration, demand shifts, and market reforms that create more options for independent generators and require new connections to transmission systems. The United States is the second largest investor in transmission and distribution (T&D) networks globally with $65 billion invested in 2017.

Additionally, the United State is widely considered a global leader in “smart” energy technology investment. To support this ecosystem, the United States is an international leader in the development of smart grid technologies and services. The smart grid is a modernized electricity T&D network that includes two-way communication systems and enables the integration of technologies to improve grid efficiency, reliability, sustainability, and security. The term “smart grid industry” is used interchangeably with other industry nomenclature (such as grid modernization) to describe the ecosystem of goods, services, and technologies that support the transmission, distribution, and storage of electricity. According to analysis from the International Trade Administration’s 2018 Smart Grid Top Market Report, the United States accounts for 36 percent of the total global capacity for electrochemical (battery) energy storage, a fast-growing subsector that can help address intermittency from renewable energy sources like solar and wind.

Oil and Gas: The United States is the world's top producer of petroleum and natural gas. Oil and natural gas accounted for nearly 60 percent of all U.S. energy production in 2018. The United States remains a major source of growth in oil and gas exploration and development, especially in shale and ultra deep-water resources. U.S. companies began exporting LNG from the continental United States for the first time in 2016, sending shipments to major markets around the world. In 2017, the United States became a net natural gas exporter for the first time since 1957. These companies have developed advanced and cost-competitive techniques for extracting hydrocarbons from shale and hard to reach offshore oil and gas deposits, altering the U.S. oil and gas sector and the domestic energy landscape.

Coal: The United States holds the world’s largest estimated recoverable reserves of coal. In 2018, the United States exported 15 percent of its coal. The remaining 85 percent was sold to end-use markets, primarily the power sector and industrial customers. In 2018, coal was used to generate 27 percent of the electricity in the United States.

Nuclear Energy: The United States operates the most nuclear reactors, has the largest installed nuclear power capacity, and generates the most nuclear power in the world. Nearly 20 percent of U.S. electricity is produced at 97 nuclear reactors in 29 states. By 2021, new nuclear reactors are expected to come online, and licenses are pending or have been issued for 10 additional new reactors. Subsectors of the civil nuclear industry are represented by companies that produce nuclear components (reactors, nuclear monitoring instruments, boilers, heat exchangers, industrial valves, instrument modules, insulation, economizers for boilers, pumps, and other reactor parts), nuclear fuel (uranium mining, conversion, enrichment, fuel assembly fabrication, and spent fuel storage), nuclear engineering and construction (site preparation, materials and equipment procurement, and construction), and nuclear advisory services (consulting on nuclear-related regulatory policies, human resources, infrastructure, legal services, and operations and program management services).

Federal Programs & Legislation

Department of Energy’s (DOE) First Installment of the Quadrennial Energy Review (QER): Transforming U.S. Energy Infrastructures in a Time of Rapid Change: Issued in April 2015, the first installment of the QER examines how to modernize the United States’ energy infrastructure to promote economic competitiveness, energy security and environmental responsibility, and is focused on energy transmission, storage, and distribution, the networks of pipelines, wires, storage, waterways, railroads, and other facilities that form the backbone of the U.S. energy system. The QER seeks to identify vulnerabilities in the system and proposes major policy recommendations and investments to replace, expand, and modernize infrastructure where appropriate.

DOE Loan Guarantees: The goal of the Department of Energy’s Loan Guarantee Program (Program), as defined in the Energy Policy Act of 2005, is to provide Federal support, in the form of loan guarantees, to spur commercial investments in clean energy projects that use innovative technologies. The American Recovery and Reinvestment Act of 2009 amended the Energy Policy Act and temporarily expanded the Program by providing loan guarantees for renewable energy systems, electric transmission systems, and leading edge biofuels projects.

Department of Interior’s National Outer Continental Shelf Oil and Gas Leasing Program for 2017-2022: Offshore oil and gas resources in the U.S. Gulf of Mexico are highlighted as part of a five-year leasing program for high-resource areas under the U.S. Outer Continental Shelf (OCS) Oil and Gas Leasing Program for 2017-2022, which is under development by the Bureau of Ocean Energy Management within the U.S. Department of Interior. Under this program, 10-region lease sales are scheduled for the Gulf, where resource potential and industry interest are high, and oil and gas infrastructure is well established. Two Gulf lease sales will be held each year and include all available blocks in the combined Western, Central, and Eastern Gulf of Mexico Planning Areas. In January 2018, the Secretary of the Interior announced draft proposed program for a new national OCS program for years 2019-2024. The proposed final program is expected in 2019. The 2017-2022 National OCS Program will continue to be implemented until the new National OCS Program is approved.

Renewable Electricity Production Tax Credit (PTC): The federal PTC is an inflation-adjusted per-kilowatt-hour (kWh) tax credit for electricity generated by qualified energy resources and sold by the taxpayer to an unrelated person during the taxable year. The PTC is meant to keep wind energy attractive for the investors who financed new wind farms as demand for clean energy sources continues to rapidly increase. Projects that break ground in 2019 can receive 40 percent of the PTC (the PTC is currently being phased out and will no longer be available after 2019).

Prepared in collaboration with the International Trade Administration's Industry & Analysis Unit (I&A)

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Industry & Analysis (I&A) staff of industry, trade and economic analysts devise and implement international trade and investment strategies to strengthen the global competitiveness of U.S. industries. By combining in-depth analysis with the International Trade Administration’s industry relationships, I&A devises initiatives to unlock export and investment opportunities for U.S. businesses, represent the interests of U.S. industry in trade negotiations, and publishes research on global opportunities for U.S. companies.

Utility Market Dynamics

U.S. utilities connect companies to stable, low-cost energy and water resources. These utilities are run by a variety of entities, both public and private, and cover geographic areas the size of cities to multi-state regions. This panel discussion from the 2019 SelectUSA Investment Summit Academy provides international companies with an overview of U.S. utilities.

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