ES #137: Gas-Fired Power Generation Falls 7.7% Y/Y

Energy Shots #137

The Department of Energy recorded a seasonal record of three consecutive triple-digit injections into lower 48 natural gas storage last week, and forecasted temperatures for the balance of May suggest that record could stretch to five.

The rapid rebound in lower 48 storage since March and the imminent transition out of shoulder season (peak renewables) provides a timely opportunity to evaluate YTD performance in U.S. power generation and demand growth.

YTD Continental U.S. Power Demand

The latest data from lower 48 U.S. balancing authorities shows year-to-date (YTD) CONUS electricity demand grew 2.5% from the same period in 2024, led by 5.6% Y/Y and 5.0% Y/Y growth in January and February, respectively.

• 2025’s YTD growth rate ranks third since 2019 and trails last year’s 2.6% increase in Jan 1 to May 17 electricity consumption despite a 9.1% Y/Y increase in 2025 YTD population-weighted degree days.

While YTD demand data offers limited support to predictions for an imminent step-change in U.S. electricity consumption, balancing authorities’ YTD generation fuel mix provides a clear look at the impacts of solar capacity growth on L48 gas demand.

Solar Dominates YTD Generation Growth

Between Jan 1 and May 17, cumulative lower 48 electricity output from solar increased 31.5% to 84.4 billion kWh from 64.2 billion kWh for the same period last year, raising solar’s share of total YTD generation to a record 5.8% from 4.4% in 2024 and 3.3% in 2023.

Meanwhile, YTD wind generation fell 0.2% from 2024 to 189.2 billion kWh and accounted for 13% of total U.S. power output—roughly the same share wind has contributed since 2022.

Substantial solar generation growth has weighed on demand for U.S. gas-fired units this year, with YTD gas-fired output down 7.7% from the same period last year to 532.0 billion kWh.

• Natural gas’ share of total YTD L48 power generation fell to 36.5%—down from 39.2% last year and 38.3% in 2023.

Looking Ahead

The transition from low demand shoulder season to peak demand summer months will also coincide with seasonal declines in L48 wind output, increasing demand for reliable, dispatchable generation like natural gas. A hotter-than-normal summer and incremental demand growth from sources like data centers (cooling) and broader sectoral electrification could more than offset a slow start to 2025 natural gas consumption.

Beyond 2025, however, the outsized share of variable renewables in the U.S. planned capacity pipeline suggests a) steeper troughs in shoulder season natural gas demand and b) upside risks to shoulder season natural gas prices/volatility as more unpredictable generation comes online.

U.S. Planned Capacity As of March 2025

• Solar: +117 GW through 2030

• Batteries: +65.8 GW through 2030

• Natural Gas: +40.5 GW through 2030

• Wind: +28.6 GW through 2030

See you next Sunday.

ES.

This commentary contains our views and opinions and is based on information from sources we believe are reliable. This commentary is for informational purposes, should not be considered investment advice, and is not intended as an offer or solicitation concerning the purchase and sale of commodity interests or to serve as the basis for one to decide to execute derivatives or other transactions. This commentary is intended for Mobius clients only and is not considered promotional material.