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Short-Term Energy Outlook

Release Date: Dec. 6, 2022  |  Forecast Completed: Dec. 1, 2022  |  Next Release Date: Jan. 10, 2022  |  Full Report    |   Text Only   |   All Tables   |   All Figures

Electricity, coal, and renewables

Electricity prices: We forecast wholesale prices for on-peak power to rise in all areas of the country during the winter months as the weather becomes colder. Increases in wholesale electricity prices this winter (December–February) range from 33% higher than last winter in California (CAISO) to more than 60% higher in the mid-Atlantic (PJM) and central (SPP) regions.

Forecast on-peak wholesale prices for most regions generally average between $60 and $80 per megawatthour (MWh) between December and February. We expect the highest wholesale prices to occur in New England, where prices could average in excess of $180/MWh, with winter peaks of more than $200/MWh. We also expect high prices in New York (NYISO) and in mid-Atlantic (PJM) markets. However, if significant market stressors occur, such as periods of extreme cold weather or fuel supply problems, wholesale prices could be significantly higher than forecast.

We also forecast retail electricity prices to be higher this winter. However, retail prices grow less than wholesale prices because of regulatory and contractual factors that vary widely across the United States. The U.S. residential electricity price in the core winter months from December through February averages 14.5 cents per kilowatthour, which is 6% higher than last winter. Price increases range from almost no change in the West North Central region to 18% in New England.

Average on-peak wholesale electricity prices for STEO electricity supply regions, winter 2021−22 and winter 2022−23

Electricity generation: Despite our forecast decline in natural gas prices in 2023, we expect the share of U.S. electric power generation supplied by natural gas will fall from 39% this year to 37% in 2023 as more renewable generating capacity comes online. We estimate that wind and solar combined account for 14% of U.S. generation in 2022, and we forecast that share will grow to 16% in 2023. Increasing generation from renewable energy, along with retirements reducing the available capacity of coal-fired power plants, contribute to our forecast that coal’s generation share will fall from 20% this year to 19% in 2023.

The Texas region (ERCOT) is likely to experience the largest shift in generation mix in 2023. We expect that the share of electric power generation from wind in ERCOT will grow from 25% in 2022 to 29% in 2023 and that the solar share will grow from 5% to 8%. ERCOT’s share of generation from coal in the forecast falls from 17% this year to 16% in 2023. But we expect growing generation from renewables, especially during peak hours, will cause the natural gas share to fall from 42% in 2022 to 36% in 2023.

Electric Reliability Council of Texas (ERCOT) electricity generation by energy source, 2015−2023

Coal markets: After increasing in both 2021 and 2022, we expect U.S. coal production to decline by 9% to less than 540 million short tons (MMst) in 2023. The primary reason for the decrease is our forecast of a 7% reduction in coal use by the electric power sector. That decline largely reflects almost 12 gigawatts (GW) of coal-fired capacity retirements in 2022 and another 9 GW in 2023. Those plant closures represent about 10% of the existing U.S. coal-fired generating fleet. Lower natural gas prices and growth in renewable resources also will reduce coal use by the electric power sector.

U.S. coal production

Electricity, Coal and Renewables
  2020202120222023
U.S. electricity generation
(billion kilowatthours)
4,009.774,108.304,227.304,162.63
Residential electricity price
(cents per Kilowatthour)
13.1613.6615.0215.39
U.S. coal production
(million short tons)
535.4578.1592.7539.2
U.S. coal consumption
(million short tons)
476.7545.6512.1477.8
U.S. solar capacity
(megawatts)
47,58661,00975,992106,994
U.S. wind capacity
(megawatts)
118,031132,629143,904148,740

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U.S. STEO electricity supply regions XLSX PNG