Coal, Natural Gas, Energy Transition, Electric Power, Renewables
May 30, 2025
US power sector gas demand falls in May amid cool weather, surging solar generation
HIGHLIGHTS
Second sharp drop in three months
Solar and coal eat into market share
US power sector gas demand has been much lower year over year during May amid surging renewable generation, cooler weather and stronger coal-fired generation.
Demand for gas from power plants has averaged 31.5 Bcf/d during May 1-30, around 2.2 Bcf/d lower than the same period of 2024, S&P Global Energy data showed May 30.
Power sector gas demand surged throughout 2022-24 amid rising power demand and falling coal-fired generation, but May will be the third month in 2025 for it to be lower year over year. It also fell sharply in March, but in April it was around 300 MMcf/d higher year over year at 29.6 Bcf/d, a new high for that month, Energy data showed.
Total US power demand has been around 1% lower year over year this month, according to preliminary data from the Energy Information Administration. Lower temperatures than in May 2024 have likely reduced cooling demand.
At the same time, solar generation has been almost 30% higher year over year, increasing its output by around 185 GWh/d, the data showed. A 90GWh/d increase in coal-fired generation has put further pressure on gas-fired generation, which has been around 320 GWh/d lower year over year during May 1-29, the data showed.
Strong capacity additions likely contributed to the surge in solar generation. The US added around 9GW of generation capacity in the first quarter of 2025, 99% of which was solar, batteries or wind.
Fuel switching
Rising gas prices have reduced the competitiveness of gas plants against coal this year. Henry Hub cash prices averaged $3.87/MMBtu so far this year, up from $2.19/MMBtu in the same period of 2024, Platts data showed. In May, cash prices have been $3.11/MMBtu, almost $1/MMBtu higher year over year. Platts is part of S&P Global Energy.
High gas prices could continue to encourage fuel switching for the rest of the year. NYMEX Henry Hub futures for July-December were trading at an average $3.78/MMBtu on May 30, data from CME Group showed. This compares with the average Platts cash price of $2.25/MMBtu during the second half of 2024.
Editor: