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As a brutal heat wave persists, natural gas consumption will hit record highs to meet the intense demand for air conditioning, according to federal energy forecasts.
In its most recent Short-Term Energy Outlook, the Energy Information Administration is predicting about 4% more electricity generation from natural gas in July and August than the same two months in 2022.
Natural gas will provide about 46% of U.S. electricity for those two months, according to EIA's forecast. EIA expects a 6% increase in electricity generation from renewables and a 2% increase from nuclear energy in July and August 2023 compared with the same period in 2022.
For all of 2023, the share of natural gas generation is expected to jump to 41%, compared to 39% last year. The share of renewable generation is expected to climb from 22% in 2022 to 23% in 2023, while nuclear power's share will hold steady at 19% for both years. Between June 2022 and June 2023, the industry will have added 16 gigawatts of solar capacity (a 25% increase) and 8 GW of wind capacity (a 6% increase).
Meanwhile, the share of coal generation is expected to drop to 16% this year from 20% last year due to plant retirements and reduced utilization of remaining plants. In 2023, plant retirements have totaled more than 10,000 megawatts, and EIA expects 18% less coal generation during the second half of this year compared with the second half of 2022.
“This is an interesting time to monitor the United States' electricity mix. As coal provides less and less power to the grid, we expect the contributions of natural gas and renewables, in particular, to increase," said EIA Administrator Joe DeCarolis.
The U.S. benchmark Henry Hub natural gas spot price has been trending lower this year compared with 2022, when it averaged $6.42 per million British thermal units (MMBtu), according to the report. Since February, the Henry Hub spot price has averaged about $2.50/MMBtu every month.
The lower prices in the first half of the year “are a result of increases in dry natural production, lower-than-average consumption due to mild winter weather and the resulting higher-than-average storage inventories," the report said.
