EIA expects changes in electricity generation and increased electricity use as economy improves

The U.S. Energy Information Administration (EIA) expects U.S. electricity generation will look different this summer compared with last summer as rising natural gas costs drive many electricity generators to switch to renewables and coal.

The annual Summer Electricity Industry Outlook, released today with Short-Term Energy Outlook (STEO), forecasts a 12% decline in electricity generation from natural gas, a 21% increase in generation from renewable sources, and an 18% increase in generation from coal nationwide over last summer. This trend will be most pronounced in Texas and the Midwest.

“We believe renewable sources will primarily make up for the decrease of natural gas usage in Texas. Our forecast is that 28% of Texas’s electricity demand will come from renewables this summer, up from 21% in 2020.”

EIA Acting Administrator Stephen Nalley

EIA forecasts a 1.5% increase in total electricity sales this summer over last summer, with a 4.5% increase in sales to the industrial sector and a 2.6% increase in sales to the commercial sector. These increases are primarily the result of rising COVID-19 vaccinations, fewer pandemic-related restrictions, and an improving U.S. economy.

“Increased electricity use will be most notable in hotels, restaurants, and other businesses that faced major hurdles in 2020 due to stay-at-home orders,” Nalley said.

Milder summer weather and fewer travel restrictions contribute to a forecast 2.5% decrease in residential electricity use per customer this summer, although this estimated household electricity use is still higher than the 2015–2019 average. EIA expects U.S. households to pay about $446 on average for electricity from June 1 to August 31, which is similar to last year.

EIA’s STEO forecast relies on the macroeconomic model from IHS Markit, from which they assume U.S. GDP growth will be 6.2% in 2021 and by 4.3% in 2022. The entire Short-Term Energy Outlook is available on the EIA website.

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