EIA expects important will increase in US wholesale electrical energy costs this summer time


The US Vitality Info Administration (EIA) forecasts that costs in US wholesale electrical energy markets this summer time will considerably improve over final summer time’s costs. The EIA’s Brief-Time period Vitality Outlook (STEO) forecasts that electrical energy costs within the Northeast areas (ISO New England, New York ISO, and PJM markets) will exceed $100 per megawatthour (MWh) between June and August 2022, up from a median of about $50/MWh final summer time. EIA forecasts summer time electrical energy costs will common $98/MWh in California’s CAISO market and $90/MWh within the ERCOT market in Texas.


Information supply: US Vitality Info Administration, Brief-Time period Vitality Outlook, June 2022
Observe: Wholesale electrical energy worth information symbolize month-to-month common locational marginal costs throughout on-peak hours (Monday–Friday, 7:00 am–10:00 pm).

The STEO forecasts electrical energy era and wholesale costs for 11 market areas within the continental United States. EIA forecasts wholesale costs for one worth hub in every STEO electrical energy provide area. The wholesale worth information within the STEO replicate the month-to-month common electrical energy worth in every area throughout on-peak hours (Monday by way of Friday, 7:00 am by way of 10:00 pm).

Numerous elements decide wholesale electrical energy costs, however the price of gas for fossil-fuel turbines is a vital driver. Wholesale costs are particularly tied to pure gasoline costs as a result of pure gas-fired items are sometimes the costliest (marginal) turbines dispatched to produce energy. The pure gasoline worth on the Henry Hub averaged $8.14 per million British thermal items (MMBtu) in Could 2022, in contrast with $2.91/MMBtu in Could 2021. EIA expects the value of pure gasoline delivered to electrical turbines to common $8.81/MMBtu this summer time, up from $3.93/MMBtu final summer time.

In previous years, the electrical energy sector has substituted pure gas-fired era with coal-fired era when pure gasoline costs have risen. Nonetheless, in latest months, coal energy vegetation have responded lower than prior to now instead supply of era, more than likely because of continued coal capability retirements, constraints in gas supply to coal vegetation, and lower-than-average shares at coal vegetation.

EIA forecasts that the share of US era from coal-fired energy vegetation will decline from 25% final summer time to 23% this summer time, and pure gasoline’s share will stay comparatively fixed at 40%.

Different trade situations that would result in larger wholesale electrical energy costs this summer time embrace the prolonged drought within the western United States. Though EIA expects a slight improve in hydroelectric era in California this summer time in contrast with final summer time, the forecast of summer time hydropower output stays comparatively low. The restricted contribution of hydropower this summer time will probably lead California to generate extra electrical energy from pure gasoline and to import electrical energy from neighboring states.


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