1. Winter heating season ending with high natural gas inventories blamed on reduced consumption in residential and commercial sectors.
2. Low natural gas prices with Henry Hub spot price at record low of $1.72/MMBtu in February, expected to remain below $2.00/MMBtu in 2Q24.
3. Forecast for strong increases in solar electricity generation in 2024 and 2025, with solar expected to provide 6% and 7% of total U.S. electricity generation, while fossil-fueled power generation is expected to decline.
The winter heating season in the U.S. is ending with natural gas inventories 37% above the five-year average, attributed to reduced consumption in residential and commercial sectors. This high inventory has caused natural gas prices to drop, with the Henry Hub spot price averaging $1.72/MMBtu in February, significantly lower than predicted. Production curtailments have been announced due to low prices, but the EIA expects natural gas production to decrease slowly.
The EIA’s Short-Term Energy Outlook report predicts a significant increase in solar electricity generation, with solar expected to provide 6% of total U.S. electricity generation in 2024 and 7% in 2025. Fossil-fueled power generation is expected to decline with a decrease in natural gas and coal share. Despite low gas prices, coal plants are expected to continue operating due to significant retirements in recent years.
Sales of electricity to U.S. end-use customers are forecasted to increase in 2024 and 2025 after a 2% decrease in 2023. A warmer summer is expected in 2024, with more forecast cooling degree days than in 2023. This is surprising given that 2023 was reported as the hottest year on record, with every month from June to December being the hottest recorded.