New England could have wholesale electricity price peaks as high as $215 per megawatthour in January, which would be more than three times higher than peak rates elsewhere in the United States. Limited natural gas pipeline capacity makes it likely that New England will need to import liquefied natural gas (LNG) or fuel oil to support electricity demand this winter. EIA expects significantly stronger global demand for LNG than average this winter, which contributes to its forecast of New England’s disproportionately large increases in wholesale electricity prices.
Other key takeaways from the December 2022 STEO forecast include:
- EIA revised its forecasts for U.S. natural gas production in 2023, expecting it to average more than 100 billion cubic feet per day for the first time. Growth in natural gas production has been limited in the Permian Basin of Texas and New Mexico because of pipeline constraints. EIA now forecasts that those constraints will be resolved more quickly than previously forecast.
· EIA expects a slight increase in crude oil production in Venezuela in the second half of 2023, following the United States’ ruling that Chevron can resume oil production there. “Our oil production forecast has a lot of uncertainty for Venezuela, but we expect that production there will increase somewhat next year,” DeCarolis said.
- EIA expects significant growth in electricity generation from wind and solar power in Texas during 2023. EIA forecasts that wind power will contribute 29% of the state’s electricity generation in 2023, up from 25% in 2022. The share of electricity generation from solar will reach 8% in 2023, up from 5% in 2022. “Renewable sources will play a key role in meeting electricity demand in Texas during peak daytime hours,” DeCarolis said.