In the latest January Short-Term Energy Outlook (STEO) released by the U.S. Energy Information Administration (EIA), a notable surge in solar electric generation is anticipated to reshape the landscape of U.S. electricity generation by 2025.
According to the EIA’s forecasts, solar electric generation is poised to escalate from its 4 percent share in 2023 to a substantial 7 percent of total U.S. electricity generation by 2025. The report underscores the pivotal role of solar energy, with developers signaling the addition of nearly 80 gigawatts of solar power within the next two years. This considerable increase is expected to elevate U.S. solar generating capacity by a striking 84 percent, positioning solar as the primary driver of growth in the country’s electricity generation until 2025.
“We are witnessing a significant transition as solar energy expands rapidly, gaining market share from traditional coal sources and moderating the growth of natural gas usage,” EIA Administrator Joe DeCarolis said.
Joe DeCarolis also noted the ongoing significance of coal and natural gas in the U.S. electric grid, even amidst the substantial growth of variable renewable resources like solar and wind.
Key highlights from the January STEO include projections on various aspects of the U.S. energy landscape:
Oil and Natural Gas Production: Despite a moderated growth pace, the EIA forecasts record-setting U.S. crude oil production, surpassing 13.2 million barrels per day in 2024 and over 13.4 million barrels per day in 2025. Annual U.S. natural gas production is also projected to reach new records during this period.
Gasoline Prices: Forecasts indicate a decline in retail gasoline prices for U.S. motorists over the next two years. Average prices are anticipated to decrease from $3.52 per gallon in 2023 to approximately $3.40 per gallon in 2024 and around $3.20 per gallon in 2025.
Crude Oil Prices: Staying relatively stable in the current year, crude oil prices are predicted to persist amid OPEC+ constraints on production. However, projections suggest a dip to $79 per barrel in 2025 as production growth outpaces global oil demand.
Coal Markets: The EIA projects a significant decline of 26 percent in coal production over the next two years, reaching 430 million short tons in 2025, marking its lowest level since the early 1960s.
Natural Gas Prices: Forecasts indicate an increase in the spot price of natural gas to an average of $3.00 per million British thermal units in 2025, rising from $2.54 million British thermal units in 2023. However, substantial U.S. production growth is expected to limit significant price surges.
The STEO underscores a shifting energy landscape in the U.S., with solar energy emerging as a dominant force reshaping the country’s electricity generation while highlighting trends and changes expected across various other energy sectors in the upcoming years.