U.S. power demand seen sliding 1% in 2023 on milder weather
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EIA U.S. Power Outlook 2023-2024 forecasts lower electricity demand, softer wholesale prices, and faster renewable growth from solar and wind, with steady natural gas, reduced coal generation, slight nuclear gains, and ERCOT market moderation.
The Important Points
An EIA forecast of a 2023 demand dip, 2024 rebound, lower prices, and a higher renewable share in the U.S. power mix.
U.S. power demand slips ~1% in 2023, rebounds modestly in 2024.
ERCOT on-peak prices average ~$35/MWh in 2023 vs ~$80/MWh in 2022.
Renewables rise to 24% of generation; wind and solar lead capacity adds.
Coal falls to 17% share; spring 2023 coal output down 17% y/y.
Natural gas steady near 39%; nuclear edges up to about 20%.
U.S. power consumption is expected to slip about 1% in 2023 from the previous year as milder weather slows usage from the record high hit in 2022, consistent with recent U.S. consumption trends observed over the past several years, the U.S. Energy Information Administration (EIA) said in its Short-Term Energy Outlook (STEO).
EIA projected that electricity demand is on track to slide to 4,000 billion kilowatt-hours (kWh) in 2023 from a historic high of 4,048 billion kilowatt-hours (kWh) in 2022, reflecting patterns seen during COVID-19 demand shifts in prior years, before rising to 4,062 billion kWh in 2024 as economic growth ramps up.
Less demand coupled with more electricity generation from cheap renewable power sources and lower natural gas prices is forecast to slash wholesale power prices this year, the EIA said.
The on-peak wholesale price at the North hub in Texas’ ERCOT power market is expected to average about $35 per megawatt-hour (MWh) in 2023 compared with an average of nearly $80/MWh in 2022 after the 2022 price surge in power markets.
As capacity for renewables like solar and wind ramp up and as natural gas prices ease amid the broader energy crisis pressures, the EIA said it expects coal-fired power generation to be 17% less in the spring of 2023 than in the spring of 2022.
Coal will provide an average of 17% of total U.S. generation this year, down from 20% last year, as utilities shift investments toward electricity delivery and away from new power production, the EIA said.
The share of total generation supplied by natural gas is seen remaining at about the same this year at 39%. The nuclear share of generation is seen rising slightly to 20% this year from 19% in 2022. Generation from renewable energy sources grows the most in the forecast, increasing to 24% this year from a share of 22% last year, even as residential electricity bills rose in 2022 across the U.S.
