Federal energy officials say power consumption across the nation will rise by 2.2% this year, after dropping nearly 4% in 2020, as state and local governments loosen COVID-19 restrictions.
Higher electricity consumption across all sectors reflects improving economic conditions this year, according to the latest Short-Term Energy Outlook released by the Energy Information Administration. For 2022, the EIA forecasts another 1% increase in energy use.
For 2021, EIA predicts a 3.3% jump in electricity sales to the industrial sector and a 1.4% increase for the commercial sector. Retail electricity sales to the residential sector are expected to grow by 2.9% this year due to colder temperatures in the first quarter of 2021 compared with the same period last year.
Rising prices mean that a smaller share of electricity will come from natural gas, sliding from 39% in 2020 to 35% in 2021 and 2022, EIA said. Coal's share is expected to rise from 20% in 2020 to 24% in 2021 before dropping to 23% in 2022. And EIA expects the share of nuclear generation to fall from 21% last year to 20% this year and 19% next year due to nuclear power plant retirements.
EIA continues to predict that renewable resources, especially wind and solar, will make up a larger share of generation—from 20% in 2020 to 21% in 2021 and 22% in 2022.
Last year, 14.8 gigawatts of new wind capacity came online, with another 15.9 GW expected this year and 5.2 GW in 2022. Utility-scale solar capacity rose by an estimated 10.5 GW in 2020 and is expected to jump by 15.7 GW this year and next year.
EIA is forecasting higher prices for the natural gas spot price at Henry Hub. In April, it averaged $2.66 per million British thermal units (MMBtu), inching higher from the March average of $2.62/MMBtu. EIA expects spot prices to average $2.78/MMBtu for the second quarter of this year and $3.05/MMBtu for all of 2021. That's an increase from the 2020 average of $2.03/MMBtu.
“In 2022, we expect the Henry Hub price will fall to an average $3.02/MMBtu amid slowing growth in LNG [liquefied natural gas] exports and rising production," the report said.
As the economy continues to recover and the COVID-19 vaccination rollout proceeds, more motorists will hit the road this summer, EIA said. As a result, the agency revised its summer forecast for gasoline consumption to average almost 9.0 million barrels per day this summer, up 1.2 million from last summer.
EIA released its latest outlook before the temporary closure of the Colonial Pipeline on May 7, which was caused by a cyberattack. The agency said it will track outage-related supply and price developments in future reports.