2023 Electricity Market Forecast
Residential and commercial energy markets have seen continued price volatility for over two years. As energy supply normalizes and demand returns, it’s becoming slightly easier to forecast electricity prices throughout the year accurately.
Will Electricity Prices Go Down in 2023?
Wholesale power prices are forecast to decline in 2023 and may continue to drop into 2024. The decline in wholesale energy prices is mainly attributable to falling natural gas prices in the US. Supply of natural gas and liquified natural gas (LNG) should increase throughout the year as two refineries return to normal operations.
Renewable Energy Helping Lower Utility Prices
Renewable energy is making an impact as well. As more wind and solar farms come online, renewables are filling power supply gaps in vast swaths of the United States. Utility-scale solar is expected to account for more than half of new electricity generating capacity in 2023. At the end of Q1 2023, renewable energy from all forms contributed an additional 11 GW to national energy production, 54% from solar.
Solar’s biggest hurdle is supply, not demand. Several materials and supply chain shortages in 2022 contributed to a 23% YoY decline in solar capacity growth. Suppliers had difficulty sourcing raw materials and substantial issues in adequate transportation options.
Solar Capacity in Texas and California
The US is expected to add a total of 29.1 GW of solar capacity in 2023. Two states, California and Texas, account for a combined 41% of the nation’s total. If completed, their combined 11.9 GW would nearly equal the entire nation’s record-breaking solar capacity growth in 2021, which totaled 13.4 GW.
Wind Capacity on the Lags
Wind farms will contribute an additional 6 GW by the end of 2023. That’s less than half of the 14 GW of added capacity constructed in 2020 and 2021. A full third of wind’s 2023 growth will be added in Texas, which has 2 GW of wind projects slated for the calendar year.
Vogtle Nuclear Power Plant in Georgia Increases Capacity
Two reactors at a single plant in Georgia will finally come online in 2023. The project was delayed for several years. In fact, the facility is the first nuclear power plant built in the US in over 30 years. The twin reactors will generate 2.2 GW in Eastern Georgia.
US Energy Price Headwinds
The energy market faces another year of supply uncertainty. The ongoing conflict in Ukraine and the worldwide embargo on Russian oil and gas will add pricing pressures in Europe and could impact US natural gas supply. Similarly, the surprise OPEC+ announcement to reduce oil production sent shockwaves through the industry. Elevated prices for oil and gas will undoubtedly impact consumers and alter energy consumption in the months ahead.
Anticipating Volatility
The best hedge against unpredictable energy prices is energy efficiency upgrades and onsite renewable power generation. Protect your bottom line with a detailed energy efficiency program and position your business for sustainable growth. Ready to get started? Contact Keen Technical Solutions today!