Power use will drop slightly this year due to milder weather and slowing U.S. economic activity, according to the Energy Information Administration’s first forecast of 2023.
In the agency’s latest Short-Term Energy Outlook, power use is expected to fall from 4,044 billion kilowatt-hours in 2022 to 4,014 billion kWh this year. But with expected improvements in the economy, consumption will increase to 4,064 billion kWh in 2024, according to the report.
Overall, electric consumption will remain “fairly stable” after growing by 3% last year, the report said. The EIA expects consumption to fall by 1% in 2023 and then rise by just over 1% in 2024.
Electric generation will follow a similar pattern, declining in 2023 and then rising in 2024 mostly due to renewable sources, the forecast said. By 2024, renewables are expected to account for 26% of all generation, compared to a 24% share in 2023. About two-thirds of the year-over-year increase will come from new utility-scale solar projects and most of the rest from wind, the report said.
About 32 gigawatts of utility-scale solar will come online in 2023 and another 32 GW in 2024, the EIA said. Small-scale solar will grow by 9 GW this year and 12 GW in 2024. Wind capacity is expected to increase by 6 GW in both 2023 and 2024, and battery storage additions to capacity will be 10 GW in 2023 and 9 GW in 2024.
Coal production will continue to decline as renewable sources make up a greater share of generation. By 2024, coal production is expected to drop to 500.8 million short tons (MMst), its lowest level in 60 years, from 530.7 MMst in 2023.
Henry Hub natural gas spot prices began this year below $4.00 per million British thermal units (MMBtu). But as temperatures fall later this month and into February, prices will rise back above $5.00/MMBtu, the report said. Once heating demand subsides, the EIA expects spot prices to average near $5.00/MMBtu for the rest of 2023.
Finally, the EIA expects gasoline prices to fall, averaging around $3.30 per gallon in 2023 and down to $3.10 per gallon next year.