EIA expects more wind and solar power and higher electricity prices
There is a causal relationship between the two.
Grock’s response to “generate a picture of wind turbines and solar panels crowding out oil pump jacks”
On Monday, April 7, 2025, Reuters reported that the US Energy Information Administration (EIA) announced a delay in the publication of the "Short-Term Energy Outlook," STEO, report “due to the plunge in oil prices to near four-year lows over growing concerns of a global recession.” EIA said they delayed the publication because they were re-running the models used for STEO forecasts to reflect the fall in oil prices.
In the report released on April 10, 2025, EIA projects natural gas’s share of US electricity generation to remain stable at 40% in 2025 and 2026, down from 42% in 2023 and 2024. It also expects higher natural gas prices, pushing up electricity costs:
We expect the load-weighted average of the 11 regional wholesale prices tracked in the [short-term energy outlook] will be $45 per megawatt hour in 2025, up 19% from the 2024 average.
Residential electricity prices across the U.S. will average 17 cents/kWh in 2025, rising to 17.6 cents/kWh in 2026. Prices averaged 16 cents/kWh in 2023.
The report also said that EIA expects solar-powered generation to increase by 35% in 2025 and 18% in 2026, as well as a short-term increase in coal-fired generation. EIA expects total US electricity generation to rise to 4,430 billion kWh in 2026, up from 4,410 billion kWh this year and 4,180 billion kWh in 2023.
The EIA report also contained these forecasts:
Global Oil Market: Global oil demand growth is expected to slow, with consumption rising by 0.9 million barrels per day (b/d) in 2025 and 1.0 million b/d in 2026, lower than prior forecasts due to trade policy impacts, particularly tariffs. Brent crude oil prices are projected to average $74 per barrel in 2025 (down 8% from 2024) and $66 per barrel in 2026, driven by global production outpacing demand. OPEC+ production cuts are unwinding, and non-OPEC+ supply is growing.
US Oil Production: US crude oil production is forecast to average 13.5 million b/d in 2025, slightly up from 13.2 million b/d in 2024, but growth is expected to plateau in 2026 as drilling activity slows.
Natural Gas: US natural gas demand is projected to grow 4% to 116 billion cubic feet per day (Bcf/d) in 2025, driven by an 18% increase in exports (mostly LNG) and a 9% rise in residential/commercial heating demand. Henry Hub spot prices are expected to average $3.80 per million British thermal units (MMBtu) in 2025 and $4.20/MMBtu in 2026.
Electricity: US electricity generation is forecast to grow by 2% in 2025 and 1% in 2026, with renewables (especially solar, rising from 5% to 8% of generation) leading the increase. Electricity consumption is also expected to rise 2% annually, driven by new manufacturing and data centers.
Trade Policy Impact: The forecast incorporates a 10% universal tariff by late 2025 and higher tariffs on Chinese imports. However, assumptions predate recent policy shifts (e.g., paused tariffs on Canada and Mexico). These policies contribute to lower global oil demand and reduced US propane exports. (Emphasis added).
My Take
The EIA forecast of continuing large increases in solar and wind power capacity is a red flag. As more wind and solar generation is added to US power grids, they will become more unstable, and electricity prices will continue to rise.
It is increasingly apparent that President Trump must address wind and solar subsidies in the ridiculously named Inflation Reduction Act. The problem is that the wind and solar tax credits, the Production Tax Credit, and the Investment Tax Credit are embedded in law. The most feasible path is to eliminate or limit the tax credits through reconciliation by capping them, adding limitations, or shortening their duration.
The most important energy policy that President Trump can implement after his tax cut package becomes law is the elimination or drastic limitation of the wind and solar tax credits using reconciliation. Otherwise, wind and solar generation will increasingly destabilize US power grids and restrict dispatchable natural gas generation.
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Beware of the wind drought trap that is set when subsidised wind and solar power drive out the reliable providers to the point where the grid will crash on nights when there is little or no wind.
The US was only one Democrat Administration away from catastrophic power failures because They are in the jaws of the wind drought trap and it is up to the Trump Administration to get them out.
There is a ‘frog in the saucepan’ effect taking place because conventional power retires in small steps. This does not cause noticeable problems in the early years while there remains spare capacity.
https://www.flickerpower.com/index.php/search/categories/general/escaping-the-wind-drought-trap
Wind droughts could have been the most important discovery in the 20th century if it had come in time to abort the mad dash to wind and solar that has cost trillions to get more expensive and less reliable power with catastrophic damage to forests and farmlands.
Australians found them after the turn of the millennium ...
https://rafechampion.substack.com/p/the-late-discovery-of-wind-droughts
https://open.substack.com/pub/rafechampion/p/we-have-to-talk-about-wind-droughts
First I think tax credits should go - they solve nothing and have become a huge burden.
I think ERCOT should be able to regulate what mixture they want on the grid for best performance and pricing. That's a bit naive, I will admit, but renewables have always had the option of being first in line.
SD 715 & HB 3356 might solve some of our issues - HB 3356 being heard today. Hopefully they will pass, and that would be a step towards reliability.
I think the critical minerals will eventually be an issue more than anything else, but as long as we are sourcing our solar panels and batteries from China and the modules to be assembled here (supposedly made in the US) then we will still need some Federal help to restore our grids. Minerals are more important in making critical things like cell phones, for cars.