Electricity Market Demand Update - Summer 2024

U.S. electric demand is expected to increase 2.7% this summer to 1,487 TWh compared to last summer, driven by warmer weather, economic growth, and data center expansions, according to the Federal Energy Regulatory Commission’s annual summer energy market and reliability report, released Thursday.

According to the report by FERC staff, U.S. data center load is projected to increase to nearly 21 GW this year, up from 19 GW in 2023. Electric demand from these facilities across the U.S. is anticipated to reach 35 GW by the end of this decade.

Despite increased power demand, wholesale electricity prices this summer are expected to be about the same or lower than a year ago, outside of New England, according to the assessment.

In most areas, natural gas prices — a key factor affecting power prices — are expected to be lower this summer compared to last summer, reflecting a shift to a well-supplied market away from a tight supply-demand balance two years ago, FERC staff said.

The Henry Hub futures contract price for this summer averaged $2.25/MMBtu, down 9% from last summer’s settled price, according to the report. Natural gas storage inventories at the start of the injection season are 23% higher than last summer’s levels and 40% above five-year average levels.

On the power supply front, total net U.S. summer capacity is expected to grow 3.4% to 1,207 GW from 1,167 GW last summer, according to the report.

By the end of the summer, U.S. battery storage capacity is expected to grow by 12.2 GW from a year ago, adding to a 5.4-GW gain last summer, FERC staff said. Staff noted 5,100 MW is expected to come online in the California Independent System Operator footprint and 4,500 GW in the Electric Reliability Council of Texas market.