U.S. power demand is expected to reach a record high of 4,027 billion kWh in 2022, according to the Energy Information Agency’s (EIA) latest Short-Term Energy Outlook (STEO) report released this month. Driving up this year’s record power consumption is the continued economic recovery and growth in the aftermath of the coronavirus pandemic, which caused an 8-year low for power demand in 2020. Power demand is expected to go down in 2023 to 4,018 billion kWh, which would be the second highest demand behind 2022 (the previous demand high was in 2018 at 4,003 billion kWh).
With consumers drawing increasing amounts of power from the electric grid, ensuring a reliable and affordable supply and delivery of that electricity will continue to be critical to the U.S. recovery from the pandemic. This surge in power demand also comes at a time when the electric grid faces significant challenges from extreme heat throughout the summer months.
Additionally, policymakers in many states and regions – most notably, California and New York – have identified electrification as a key solution to decarbonize other sectors that have not traditionally been served by the electric grid. This includes the transportation sector, building heat, and appliances. The additional demand from consumers will compound reliability challenges for the power sector, requiring a comprehensive strategy that leverages multiple technologies to ensure the required electricity supply.
As non-dispatchable, or non-controllable low-carbon resources, including solar and wind, accelerate deployment to serve the grid, dispatchable or controllable resources will also be needed to complement renewables when they are not producing sufficient supply to meet demand. While the EIA forecasts renewables will cover about 22 percent of power generation capacity this year, natural gas is playing a critical role by providing the greatest share of generation capacity at 37 percent, demonstrating its importance in ensuring reliability throughout the energy transition to low-carbon resources – both as a balancing resource that can be taken on and off as needed and as generation capacity that powers the grid around the clock. The North American Energy Reliability Corporation (NERC)’s recent report also recognized the need for firm resources like natural gas as the grid continues to transition.
Compared to non-competitive markets, competitive wholesale electricity markets throughout the U.S. have proven to be uniquely capable of delivering reliable power while reducing emissions at lower costs for consumers . In a competitive regime, companies – not customers – bear the risk of investment and the cost of building power generation resources. EPSA’s member companies operating in these competitive markets are helping drive the economic recovery through a portfolio of about 150,000 MW of power-generating technologies that can help meet the growing power demand.
Our members have invested in the resources that will ensure homes and businesses have the electricity they need to live and operate. This was done by following market signals to direct private capital toward a combination of solutions, including natural gas, renewables, energy storage and nuclear power facilities at competitive prices. The lessons learned from the competitive market experiment showcase an all-of-the-above, market-driven approach to meeting power demand and reducing emissions – not selecting winning and losing technologies.
Reliability must be the top priority of policymakers and regulators as the energy transition continues to progress. EPSA and its members will continue to advance a comprehensive strategy to meet America’s electricity needs. Our approach will continue to feature resources and technologies that can deliver firm power, while also reducing emissions over time.
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