Electricity demand to be lower this summer amid cooler weather

U.S. electricity demand is expected to decline this summer from last summer as a cooler summer will lead to less air conditioning use, according to the U.S. Energy Information Administration (EIA). Meanwhile, U.S. coal-fired electricity generation is projected to fall to its lowest point this century.

The EIA released Tuesday (May 9) the May Short-Term Energy Outlook. It showed that while electricity demand will fall this summer, more electricity will be generated from renewable sources and natural gas throughout 2023.

U.S. natural gas consumption for electricity generation is projected to be at the second-highest level this summer, surpassed only by last summer’s consumption level. U.S. electricity generation from wind and solar is expected to continue to rise. The western United States is expected to produce more hydropower in the coming months following a wet winter.

“The increasing share of renewables in the U.S. generation mix is a major feature of our electricity forecast this summer and through 2024,” said EIA Administrator Joe DeCarolis. “As electricity providers generate more electricity from renewable sources, we see electricity generated from coal decline over the next year and a half. We expect that the United States will generate less electricity from coal this year than in any year this century.”

U.S. retail electricity costs are projected to remain higher than pre-pandemic levels. Even if households consume less electricity, their electricity bills will likely be similar to or higher than last summer.

“Our forecast for the consumption of electricity and the amount Americans pay for electricity this summer is highly dependent on weather,” DeCarolis said. “If this summer turns out to be warmer than we expect, we will see more demand for air conditioning, greater electricity use and higher bills.”

Also, in the May outlook, the EIA revised its 2023 projections for crude oil prices. International benchmark Brent crude oil spot price is expected to be an average of about $79 per barrel in 2023. That’s 7% lower than the April forecast. U.S. gasoline prices are expected to average $3.40 per gallon this summer, down about 10 cents from the April forecast.