As much of the nation experienced a warm January and February, residents and businesses used less heat, resulting in the lowest first-quarter consumption of natural gas in five years, according to the Energy Information Administration.
With these winter temperatures among the warmest on record, as reported by preliminary federal data, EIA said in its March Short-Term Energy Outlook that residential and commercial consumption was 11% lower during the first quarter of 2023 compared to the same period last year.
“A lot less natural gas was consumed in the U.S. residential and commercial sectors than we generally expect in January and February,” said EIA Administrator Joe DeCarolis. “The warmer weather in most of the country means homes and businesses haven’t been running their heating systems as much as they normally do during those months.”
Henry Hub natural gas spot prices averaged $2.38 per million British thermal units (MMBtu) in February, the lowest monthly average since September 2020. But EIA expects volatility going forward. “Although we reduced our Henry Hub price forecast from last month’s STEO, we still expect natural gas prices to increase in the coming months,” the report said.
EIA expects natural gas will continue to be the predominant source of U.S. electricity generation through 2024, as it has been over the past five years. Natural gas accounted for an average of around 38% of total generation in 2023 and 2024.
But renewable sources will grow the most during the next two years, with about 7 gigawatts of new wind capacity and 29 GW of new solar PV capacity coming online this year, according to EIA.
“These additions will result in renewable energy resources other than hydropower accounting for 19% of generation in 2024 compared with 15% in 2022,” the report said.
This month’s report included the debut of a new data set on generating capacity, which showed that wind, solar and battery storage accounted for 82% of the new utility-scale generating capacity that developers plan to bring online each year.
“Just over half of the new U.S. generating capacity expected in 2023 is solar power,” according to the Preliminary Monthly Electric Generator Inventory. “If all the planned capacity comes online this year as expected, it will be the most U.S. solar capacity added in a single year, and the first year that more than half of U.S. capacity additions are solar.”