Dive Brief:
- Retail power sales to the residential sector will decline by 0.5% this year, compared to 2015, according to the U.S. Energy Information Administration's Short Term Energy Outlook, released this week. Sales will rebound 1.7% in 2017, the agency said.
- A milder winter will have a strong impact in the first quarter, with EIA estimating residential consumption will be 5.8% lower than the same period last year, which was 7% colder than normal.
- Low gas prices are expected to remain the norm for at least a couple of years, with Henry Hub spot estimated to be $2.65/MMBtu this year and $3.22/MMBtu in 2017. Prices averaged $2.63/MMBtu last year.
- As renewable energy surges, EIA said the generation share for gas and coal in 2017 will fall to to 31.4% and 33%, respectively.
Dive Insight:
The United States' generation mix is changing quickly, but EIA still sees coal besting natural gas in 2017. That said, both fossil fuels will slide as renewables play an increasing role.
"The mix of generating units that supply electricity in the United States is undergoing a significant transformation," EIA said in its Jan. 12 report. "Many older coal plants are being decommissioned as the industry adapts to sustained low costs of competing natural gas generating units and the effects of environmental regulations."
Last year, EIA said at least 14 GW of coal-fired capacity were retired, "equal to nearly 5% of the operable coal capacity existing at the end of 2014." But those closures are likely to stabilize, and power plant operators have reported plans to retire at least 10.7 GW of additional coal capacity during 2016 and 2017, though "the total could rise as state policies related to the Clean Power Plan take shape."
Though residential sales will slip this year, EIA said it anticipates sales to grow by 1.7% in 2017, while the total number of residential customers grows by 0.9%, which the agency said would be the highest growth rate since 2007.
Retail electricity sales to the commercial sector are expected to rise by 0.9% and by 1.1% in 2016 and 2017, respectively. Forecast U.S. industrial sector sales increase by 1.1% in 2016 and by 0.4% in 2017.