US President Donald Trump is moving priorities that are key to a wide-ranging effort to pass a budget deal. A recent report shines a light on one initiative that indicates the United States indeed has enough generating resources. This will go a long way toward serving the peak anticipated summer demand and capacity reserve margin needs in 2025.
The reliability assessment suggests that the US is well-equipped to provide for its anticipated future electricity demand. Wholesale electricity prices are forecast to increase everywhere except California relative to last summer. This hike is especially acute in the northeast US, where consumers are likely to feel the greatest effects.
Three main things are driving the expected price increase. The country’s unusually cold winter left the US with lower than normal natural gas storage levels. Because of these factors, natural gas prices shot up. These factors combined have placed upward pressure on electricity wholesale prices. Our partner GlobalData has something to say about all of these trends. They caution that the summer of 2025 will be difficult for consumers and businesses alike.
Approximately 60% of the US’s hydroelectric generation capacity is located at the utility scale. This ability to build new capacity largely exists in the Pacific Northwest, Desert Southwest and Rocky Mountains. The recent trend in lower hydropower generation seems to have changed course offering some relief while electricity demands continue to climb. Today, the one-two punch of both rising natural gas prices and projected increases in wholesale electricity rates still have those alarm bells ringing.
The next budget proposal from President Trump will be crucial in tackling these challenges and doing so in line with his overall policy vision. We appreciate the administration’s focus on energy resources and supply stability. This change will allow America to better meet its energy needs when they are required most, during peak periods of demand.
