Natural Gas Power Generation Expected to Set Record

EIA Cites Heavy Air Conditioning Use, Shift Away from Coal

The U.S. Energy Information Administration expects record natural gas use this summer for power generation for heavy air conditioner use. | Shutterstock

Jul 11, 2023 | John Cropley

With fuel prices much lower than in 2022, record amounts of electricity are expected to be generated by burning natural gas in July and August 2023.

The U.S. Energy Information Administration on Tuesday forecast record-high amounts of electricity would be generated by burning natural gas this summer.

High demand for power was cited as a cause, along with low gas prices and power industry trends.

EIA said extensive use of air conditioning during hot weather is expected to raise demand for electricity.

Fuel prices are another driver, EIA said in its July Short-Term Energy Outlook, issued Tuesday. Electric utilities’ cost for coal was 9% higher in the second quarter of 2023 than in the same period in 2022, while natural gas was 66% lower. This gave them a nearly equal cost per million BTU.

As a result, EIA predicts 4% more electrical generation from natural gas in July and August 2023 than in the same two months of 2022.

EIA also predicts a 6% year-over-year increase in July and August in power generated by renewable sources, which are seeing rapid growth in installed capacity.

“This is an interesting time to monitor the United States’ electricity mix,” EIA Administrator Joe DeCarolis said in the news release. “As coal provides less and less power to the grid, we expect the contributions of natural gas and renewables in particular to increase.”

EIA said about 6,000 MW of new combined cycle natural gas turbine capacity and nearly 15,000 MW of wind and solar capacity have come online so far in 2023.

Other details from the July Short-Term Energy Outlook:

- Natural gas is expected to account for 41% of U.S. power generation in 2023 and 40% in 2024, compared with 37% in 2021.
- Coal is projected to drop from 23% in 2021 to 15% in 2024.
- Renewables are expected to rise from 20% in 2021 to 25% in 2024.
- As a result, U.S. carbon dioxide emissions are expected to decline from 4,964 billion metric tons last year to 4,789 this year and to 4,774 next year.
- Nuclear holds steady around 19% to 20% in the four years of actual and projected data.
- Wind power generation far exceeds solar, with installed wind capacity expected to reach 148.7 GW nationwide this year vs. 98.8 GW for solar.
- Installed solar capacity is expanding much more quickly than wind: Year-over-year increases of 17.2%, 38.2% and 32.2% are recorded or projected for solar in 2022, 2023 and 2024, compared with 6.2%, 5.6% and 4.1% for wind.