EIA Expects Coal and Renewables to Power Summer Demand

The U.S. Energy Information Administration (EIA) has released its Short-Term Energy Outlook and supplemental reports analyzing energy trends for summer 2021.

Trends in energy have been significantly altered in the last year as the pandemic and subsequent mitigation efforts changed traditional behavioral patterns. The transition from in-office to at-home work and restrictions on gatherings, coupled with drops in demand from the industrial and commercial sectors, led to reductions in electrical demand, especially in the summer of 2020.

This year, as COVID vaccines are distributed and the last of the remaining restrictions on gatherings are lifted, it is expected that electricity demand will reverse course and rise. The EIA estimates that demand in the three months of summer 2021 will be 1.5 percent higher than the previous year.

With electricity demand expected to rise, the nation will need fuel to adequately supply that increase. However, the EIA estimates that a major change in fuels is to be expected. Last summer, natural gas-fired power plants contributed 42 percent of total electricity generated with coal-fired generation, the only close competitor, producing 22 percent of total generation and renewables contributing just 2 percent.

This year, natural gas-fired power is expected to fall five percent, from 42 to 37 percent, while coal and renewables cover the drop. According to the report, coal-fired generation is anticipated to rise from last summer’s level to 26 percent. Renewables are expected to see the highest net increase year-over-year, contributing 12 percent of total generation this summer.

The fall in natural gas usage is being attributed to higher-than-normal prices this summer, according to the EIA. This creates an opportunity for lower-cost coal to fill in the supply lapses created by natural gas, while federal programs promoting the rise of renewables are fueling major developments in solar and wind power.

While it remains to be seen how summer energy usage actually develops, the rising role of renewables is likely to continue. The increase in coal usage is likely short-term as more coal-fired power plants shutter and climate goals continue to be at the forefront of discussions, along with the future of natural gas in the energy mix.