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Today in Energy

May 12, 2021

EIA forecasts less natural gas-fired electricity generation this summer

U.S. electric power sector electricity generation by fuel
Source: U.S. Energy Information Administration, Short-Term Energy Outlook (STEO)

We published a Summer Electricity Outlook supplement, which provides more detail about our forecasts for U.S electricity consumption, power generation, and electricity prices for the upcoming summer months of June, July, and August, to our May Short-Term Energy Outlook. In this outlook, we forecast U.S. natural gas-fired generation during the summer of 2021 will total 420 billion kilowatthours (kWh), representing 37% of total generation compared with 42% last summer. Forecast U.S. coal generation will rise to 289 billion kWh this summer, representing an increase in generation share from 22% last summer to 26% this summer.

One driver of our expectation that generation from natural gas-fired power plants will decline this summer is our forecast for higher natural gas prices in 2021. The forecast U.S. cost of natural gas delivered to electric generators averages $3.13 per million British thermal units this summer, which would be 46% higher than during summer 2020 and close to the price during summer 2018. Less natural gas-fired generation is partly offset by increased generation from coal-fired power plants, which become more economical to run than in previous years. We forecast that the overall level of U.S. natural gas-fired generation this summer will fall to about the same amount generated in 2018. Although we expect coal generation to rise this summer, the forecast level is still 12% below the 2018 level.

U.S. electric power sector summer electricity generation by fuel
Source: U.S. Energy Information Administration, Short-Term Energy Outlook (STEO)

Recent growth in U.S. generating capacity from renewable energy, especially wind and solar, is also displacing some natural gas-fired generation this summer. We expect renewable energy sources, other than hydropower, will provide 138 billion kWh of generation this summer, which represents 12% of total U.S. generation, a 10% increase from last summer.

The extension of federal tax credits is encouraging the continued construction of new wind capacity, much of which is in midwestern states. A large amount of large-scale solar capacity is under construction in Texas. This additional solar capacity, along with continued installation of new wind turbines, will likely lead to substantially less generation from natural gas-fired power plants in Texas this summer.

Because of possible lower-than-average water supply in the Pacific Northwest, we expect U.S. hydroelectric generation during June, July, and August 2021 will decline to 71 billion kWh from 81 billion kWh last summer. Increased generation from coal and other renewables will likely offset the decreased hydro generation in the Northwest.

Principal contributor: Tyler Hodge