USA Electricity Industry Structure and Outlook

  • This coal-fired generation capacity is expected to decrease by 4 – 7 percent CAGR from 2015 to 2019, while natural gas and renewable capacities are expected to increase at the rate of 1 – 3 percent and 10 –13 percent, respectively
  • Wind generation capacity has contributed to a major share in 2017 capacity additions. Solar had seen a CAGR of 44.55 percent between 2015 and 2017
  • As electricity industry transformation is taking place rapidly in the US, the grids are becoming smarter, the electricity generation sources are becoming cleaner, and end-users have more choices
  • EIA has forecasted that the overall electricity generation from coal will average around to 28 percent in 2018 and 27 percent in 2019

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  • The yearly average electricity demand decreased marginally by 1.5 percent in 2017 compared to 2016
  • Electricity demand in the US is expected to increase marginally with a CAGR of 0 – 1 percent from 2015 to 2019
  • Electricity demand in the US is highly seasonal, due to increase in demand from the residential and commercial sectors during summer and winter
  • The electricity supply in the US is estimated to decrease with a CAGR of 2.99 percentage between 2015 and 2019
  • In 2017, electricity generated in the US accounted at 4,085.8 Million MWh in 2017, which had decreased from 4150.0 Million MWh in 2016, a decrease of 1.555 Y-o-Y

Market Consumption Outlook 

  • The total electricity consumption is expected to increase by 1.88 percent Y-o-Y in 2018 to reach an estimated total of 3,901 Million MWh
  • EIA forecasts that the electricity generation from natural gas-fired power plants is expected to reach to 34 percent in 2018 and to 35 percent in 2019
  • The electricity generation share from coal is expected to average around 28 percent in 2018 and to 27 percent in 2019

Price Trend and Forecast 

Historical Price

  • The average industrial price of electricity in the US had increased by 2.37 percent Y-o-Y from 2016 to 2017. The price had increased from $Cents 6.75/kWh in 2016 to $Cents 6.91/kWh in 2017 
  • Increase in the price of electricity is mainly due to increase in natural gas prices
  • Electricity price in June 2018 increased by 5.79 percent M-o-M to reach $Cents 7.31/kWh

Price Forecast 

  • The average yearly industrial electricity price is expected to increase by 3-5 percent in 2018 Y-o-Y compared to 2017
  • Electricity price is expected to increase from $Cents 6.91/kWh in 2017 to the $Cents 7.09/kWh in 2018
  • The US electricity generation mix will depend largely on natural gas prices, as coal-based generation is expected to decrease. Wind generation is expected to increase in 2018 to 705,000 MWh/d

USA Electricity Market Price Drivers 

  • Prices of feedstock, such as coal and natural gas, which fuel ~66 percent of the total electricity generated, are the major drivers for electricity prices in the US. An increase/decrease in the prices of these feedstock will have a direct impact on the electricity price 
  •  CDD is one of the major drivers, which impact the prices of electricity. With an increased CDD, there will be a higher cooling demand, which will, in turn, increase the electricity demand, thereby exerting an upward pressure on electricity prices in the short term