In its ‘Summer Electricity Outlook’, a supplement to its May 2022 ‘Short-term Energy Outlook’, the US Energy Information Administration expects the largest increases in electric power sector generation this summer to come from renewable energy sources, mainly as a result of new capacity additions. It forecasts utility-scale solar generation between June and August 2022 to grow by 10 million MWh compared with the same period last summer, and wind generation to grow by 8 m MWh. Meanwhile forecast generation from coal and natural gas declines by 26 m MWh in the summer, although natural gas generation could increase in some electricity markets where coal supplies are constrained.
Wind and solar power capacity has been growing steadily in recent years. EIA estimates that by the start of June, the US power sector will have 65 GW of utility-scale solar-generating capacity, a 31% increase in solar capacity since June 2021. Almost one-third of this will be built in the Texas electricity market. The sector will also have an estimated 138 GW of wind capacity online this June, which is a 12% increase from a year ago.
Along with growth in renewables capacity, EIA expects that an additional 6 GW of new natural gas CCGT (combined cycle gas turbine) based capacity will come online by June 2022, an increase of 2% from last summer. Despite this increase expected natural gas-fired generation at the national level will be 1.3% lower than last summer.
EIA expects the price of natural gas delivered to generators will average nearly $9 per million BTUs between June and August 2022, which would be more than double the average price last summer. The higher expected prices and growth in renewable generation will likely lead to less natural gas-fired generation in some regions of the country.
The US electricity industry has been steadily retiring coal fired plants over the past decade. Between June 2021 and June 2022, the electric power sector will have retired 6 GW (2%) of its coal-fired capacity.
In previous years, higher natural gas prices would have resulted in more coal-fired electricity generation. However, coal plants have been limited in their ability to replenish their historically low inventories in recent months as a result of mine closures, rail capacity constraints, and a tight labour market. These coal supply constraints, along with continued retirement of generating capacity, contribute to EIA’s forecast that US coal-fired generation will decline by 20 m MWh (7%) this summer. In some regions of the country, these coal supply constraints may lead to increased natural gas-fired generation despite higher natural gas prices.