Cold Wave Expected to Drive Electricity Demand Up

As a winter cold front sweeps across the country, energy providers prepare for large increases in demand.

In Texas, the Electric Reliability Council predicts record power usage and issued a weather watch for Jan. 15-17. ERCOT believes power usage will reach 79 gigawatts, breaking the record of 65 gigawatts.

Even though demand is expected to reach record proportion, ERCOT believes there will be ample supply. Natural gas, the leading source of electricity generation in Texas and the U.S. is being produced at a record pace along with wind and solar. Nuclear and coal will also be utilized. Natural gas provides 43% of the energy to generate electricity nationwide followed by nuclear at 18%, coal 16%, wind 10%, hydro 8% and solar 4%, according to EIA data through October.

The future looks bright, too. Natural gas demand and production in the U.S. are expected to set new records in 2024 and 2025, according to recent forecasts by the Natural Gas Supply Association (NGSA) and the Energy Information Administration (EIA).

NGSA forecasts overall demand growth to average 121.4 billion cubic feet per day (bcf/d), which is about a 3% increase over 2023. Even though natural gas exports – primarily driven by liquefied natural gas (LNG) and pipeline deliveries to Mexico – will establish the largest gains, residential and commercial usage is expected to increase, too.

Natural gas will continue to be the leading source of electricity generation in the U.S. and EIA forecast no change in 2024 and 2025, but solar is expected to experience the biggest gains this year, EIA stated.

“We expect solar power to be the leading source of growth in electricity generation in both 2024 and 2025 as 36 gigawatts (GW) and 43 GW of new solar capacity come on line, respectively,” EIA stated in its Short-Term Energy Forecast released on Jan. 9. “The new capacity will boost the solar share of total generation to 6% in 2024 and 7% in 2025, up from 4% in 2023.” We expect that electricity generation from natural gas will be unchanged in 2024 and 2025 compared with 2023.

EIA projects a 1% to 2% increase in production or about 1.5 billion cubic feet per day (Bcf/d) in 2024 and 1.3 Bcf/d in 2025, down from growth of 4.0 Bcf/d in 2023. “The slowing growth reflects a drop in natural gas production associated with oil drilling in the Permian Basin. U.S. dry natural gas production of 105 Bcf/d in 2024 and 106 Bcf/d in 2025 would both be records,” EIA said.

“We expect the spot price of natural gas to average $2.70 per million British thermal units (MMBtu) in 2024 and rise to an average of about $3.00/MMBtu in 2025, up from an average of $2.54/MMBtu in 2023,” EIA said. “Prices increase because of slowing growth in natural gas production and increasing U.S. liquefied natural gas exports, particularly in 2025 following the addition of new export capacity in late 2024. However, we expect upward price pressures will be limited by relatively flat consumption of natural gas in the electric power sector and persistently high inventories.”

Alex Mills is the former President of the Texas Alliance of Energy Producers