Notable Forecast Changes

• EIA has expanded its forecasts for electricity supply in the United States and has introduced new forecasts for wholesale electricity prices. A STEO Supplement provides more information about the changes. With these updates, EIA is improving its regional-level trend analysis by inserting a generator-level production cost model that simulates hourly generation at individual power plants. This improves our insight into generation, especially from fast-growing renewable sources like wind and solar.

• This additional granularity and the assumption that wind will return to more normal levels in 2019, after a windy first half of 2018 results in an EIA forecast that electricity generation from wind power will average 295 billion kilowatthours (kWh) in 2019 and 335 billion kWh in 2020, estimates that are 4% and 7% lower, respectively, than forecast in the July STEO. In addition, the application of hourly dispatch that better models solar incidence lowers the solar electric production forecast by 1.1% in 2019 and by 2.8% in 2020.

• EIA forecasts that West Texas Intermediate (WTI) crude oil prices will average $5.50/b lower than Brent prices from the fourth quarter of 2019 through the end of 2020. In the July STEO, EIA forecast this differential to be $4.00/b. The wider forecast Brent-WTI differential reflects EIA updated assumptions about the marginal cost of transporting crude oil via pipeline from Cushing, Oklahoma, to the U.S. Gulf Coast.

• EIA forecasts natural gas spot prices at Henry Hub to average $2.36 per million British thermal units (MMBtu) in the second half of 2019, which is 14 cents/MMBtu lower than expected in the July STEO.

• For more information, see the detailed table of STEO forecast changes.