A scorching summer and more economic activity are causing a big jump in electricity consumption across the nation, according to the Energy Information Administration.
In its August 2022 Short-Term Energy Outlook, EIA said it expects electricity consumption to rise by 2.4% this year over 2021. However, sales are expected to decline by 0.3% in 2023, according to the forecast.
“This summer has been hotter in the United States than normal, even in the context of the pretty hot summers of the last few years," said EIA Administrator Joe DeCarolis. “High temperatures have contributed to more air conditioning load, which is a significant driver in our forecast for more electricity consumption this year compared to last year."
Higher consumption of natural gas is helping meet this year's higher demand for electricity to the point where the U.S. has consumed “more natural gas to meet electricity demand so far this summer than the previous five-year average," said the Aug. 9 report.
Renewable energy sources are also helping meet increased demand. Wind and solar are expected to provide 22% of U.S. generation in 2022 and 24% in 2023, up from 20% in 2021, the report said. Utility-scale solar capacity is expected to grow by 20 gigawatts in 2022 and 24 GW in 2023, representing an addition of 31 billion kilowatt-hours of electric generation in 2022 and 41 billion kWh in 2023.
High demand for electricity means that consumers can expect higher retail prices, according to the forecast. U.S. residential electricity prices are expected to average 14.6 cents per kWh in 2022, up 6.1% from 2021.
In July, the Henry Hub natural gas spot price averaged $7.28 per million British thermal units, down from $7.70/MMBtu in June and $8.14/MMBtu in May. Average natural gas prices fell over the last two months primarily because of higher domestic supply.
However, natural gas prices rose by almost 50% in July due to the electric power sector's continued high demand. Henry Hub spot prices were $5.73/MMBtu on July 1 and soared to $8.37/MMBtu on July 29.
“We expect the Henry Hub price to average $7.54/MMBtu in the second half of 2022 and then fall to an average of $5.10/MMBtu in 2023 amid rising natural gas production," the report said.