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EIA sees more renewable and coal generation this summer as electric sales rise

This summer could see an increase in renewable and coal-fired generation as electricity sales rise relative to last summer’s sales during the COVID-19 pandemic, according to the recently released Short-Term Energy Outlook (STEO) from the Energy Information Administration’s (EIA).

Electricity generation in the United States “will look different this summer compared with last summer as rising natural gas costs drive many electricity generators to switch to renewables and coal, the EIA said in its annual summer STEO, released May 11.

The summer STEO forecasts a 12 percent decline in electricity generation from natural gas, a 21 percent increase in generation from renewable sources, and an 18 percent increase in generation from coal over last summer, with the trend most pronounced in Texas and the Midwest.

“We believe renewable sources will primarily make up for the decrease of natural gas usage in Texas,” Stephen Nalley, acting EIA administrator, said in a statement. “Our forecast is that 28% of Texas’s electricity demand will come from renewables this summer, up from 21% in 2020.”

For total electricity sales, the EIA is forecasting a 1.5 percent increase this summer over last summer, with a 4.5 percent increase in sales to the industrial sector, and a 2.6 percent increase in sales to the commercial sector. The increases are primarily the result of rising COVID-19 vaccinations, fewer pandemic-related restrictions, and an improving economy, the EIA said.

The increased electricity use will be most notable in hotels, restaurants, and other businesses that faced hurdles in 2020 because of stay-at-home orders, Nalley said.

Milder summer weather and fewer travel restrictions, however, should contribute to a forecast 2.5 percent decrease in residential electricity use per customer this summer, according to the EIA report, though the agency noted that estimated household electricity use is still higher than the 2015-2019 average. The EIA expects U.S. households to pay about $446 on average for electricity from June 1 to August 31, a level similar to last year’s.

The STEO forecast relies on the macroeconomic model from IHS Markit, from which the EIA assumes U.S. GDP growth will be 6.2 percent in 2021 and 4.3 percent in 2022.