Renewable energy is set to take on a greater role in the new year, with solar and wind together expected to generate more power than coal for the first time ever in the U.S., according to a report from the Energy Information Administration released Tuesday.
Investment in solar photovoltaic generating capacity has helped solar become the “fastest growing source” of U.S. electric power generation , the government agency wrote in its monthly “Short-term Energy Outlook” report. Solar generation is likely to increase by 39% in 2024 from 2023.
The forecast follows a Dec. 5 renewable energy industrial outlook report from Deloitte, which said the solar market is likely to lead the strength in the renewable energy industry next year.
Read: Why solar energy will continue to lead the pack among renewable energy sources in 2024
“Renewables, particularly solar photovoltaics, are growing rapidly and making large contributions to electricity generation,” EIA Administrator Joe DeCarolis said in a statement.
Meanwhile, generation from coal-fired power plants had the sharpest decline in the forecast because of “growth in renewable energy sources, lower natural-gas prices, and continuing retirements of coal-fired power plants,” the EIA said.
It expects coal-fired power plants to “generate less in 2024…than the combined generation from solar and wind for the first time on record.”
The EIA also sharply reduced its 2024 forecast for U.S. natural-gas prices.
It forecasts U.S. Henry Hub spot prices at $2.79 per million British thermal units next year, down 14.3% from its November forecast. January natural gas on the New York Mercantile Exchange
NG00,
NGF24,
settled Monday at $2.43 per million BTUs.
The EIA cited “a warmer-than-average start to the winter, which has reduced demand for space heating in the residential and commercial sectors, and high natural-gas production” for the downward revision to the price forecast.
“We’re seeing record domestic natural-gas production paired with lower-than-expected natural-gas demand, and we expect that is going to push prices lower this winter season,” DeCarolis said.
The government agency also cut its 2024 price forecasts for U.S. benchmark West Texas Intermediate oil by 12.5% to $78.07 a barrel, and for global benchmark Brent oil by 11.4% to $82.57 a barrel.
On Monday, prices for front-month January WTI oil futures
CL.1,
CLF24,
settled at $71.32 a barrel on the New York Mercantile Exchange. February Brent on ICE Futures Europe
BRN00,
BRNG24,
settled Monday at $76.03. prices traded even lower on Tuesday.
Still, the EIA said it expects “upward crude-oil price pressures in the coming months as global oil inventories decline in our forecast in the first quarter of 2024,” driven in part by the recently announced OPEC+ production cuts.
The EIA will release its next Short-term Energy Outlook report on Jan. 9 and it will include a forecast for the energy sector through 2025.
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