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U.S. Power Demand Slipping
The U.S. Energy Information Administration (EIA) has forecasted a 1% decline in U.S. power consumption in 2023 compared to the previous year due to milder weather conditions, which will result in lower usage than the record high seen in 2022.
According to the agency’s Short-Term Energy Outlook (STEO) released on Tuesday, electricity demand is expected to decrease to 4,000 billion kilowatt-hours (kWh) in 2023 from the historic high of 4,048 billion kWh recorded in 2022. However, the demand is predicted to rise to 4,062 billion kWh in 2024 as the economy grows.
The EIA predicts that wholesale power prices in 2023 will be significantly reduced due to lower demand and increased generation of electricity from renewable sources, combined with lower natural gas prices. The on-peak wholesale price at the North hub in Texas’ ERCOT power market is estimated to average $35 per megawatt-hour (MWh) in 2023, a considerable decline from the $80/MWh average in 2022.
As renewable energy capacity, such as solar and wind, continues to increase and natural gas prices decrease, coal-fired power generation is expected to decrease by 17% in the spring of 2023 compared to the spring of 2022. Coal is projected to contribute to 17% of total U.S. generation in 2023, down from 20% in the previous year.
Natural gas will continue to supply 39% of total generation, while nuclear energy’s share is predicted to rise slightly from 19% in 2022 to 20% in 2023. Renewable energy generation will see the most significant growth, reaching a 24% share in 2023, up from 22% in the previous year.
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