Energy Crisis Hits the US, with 124% price rises seen in New York
Energy assets can reduce vulnerability from fossil fuels supply, while Demand Response (DR) and trading can help to reduce cost and generate revenues, according to GridBeyond’s latest report
HOUSTON–(BUSINESS WIRE)–#DR–The energy crisis that has been building for a year has mostly affected the UK and European countries so far, but its impacts are starting to be felt in the US.
In the UK, wholesale energy prices increased rapidly from the second half of 2021. As a net importer of energy, the UK is exposed to volatility in gas prices. In addition, last year, countries in Asia and Europe used significant amounts of gas stocks during a long winter, which drove up prices, while the reopening of economies following the Covid-19 pandemic also sparked higher demand. More recently, the conflict in Ukraine has led to the cost of gas soaring even further, which has in turn pushed bills higher.
While the US may import only a small amount of Russian oil and gas it is tied to Russian energy via its participation in highly globalized supply chains.
In 2021, the US imported about 626,000 barrels per day of oil (7% of imports) from Russia. To put this amount into context, the US produces 75% of its crude oil supply and 90% of its natural gas supply domestically. This gas is used to generate 37% of US electricity demand. Natural gas’ share of US generation is expected to remain largely constant in spite of higher prices this year, the US Energy Information Administration (EIA) has said.
The average price of electricity for residential consumers could reach $0.1524/kWh in 2023, the EIA forecast on 7 September in its latest Short Term Energy Outlook. That would represent about a 3.3% increase from this year. Businesses across the country will see similar increases, but the increase in energy prices is not uniform across the country. Wholesale electricity prices in the Southwest are expected to average 25% higher than in 2021. Meanwhile the highest forecast wholesale prices are at more than $100/MWh in ISO New England (up 96% from 2021) and New York ISO (up 124% from 2021).
Renewable energies can reduce US vulnerability to fossil fuel supply and help businesses to navigate the energy crisis. But an increasingly renewables-based power system means a growing need for more flexibility in the system to manage peaks and troughs caused by intermittent generation.
Wayne Muncaster, SVP for North America said:
“The use of DR and trading generate savings and revenues while helping businesses to manage this current crisis and react quickly to market volatility.
“In these times where the cost of energy is rising, many large energy consumers like manufacturers, cold storage industries, but also hospitals and large retailers’ companies could look at DR to mitigate against price peaks, while supporting the transition towards net zero”.
To download a copy of the report visit: https://gridbeyond.com/lp/energy-crisis/
Contacts
Gabriella Di Salvo
Global PR Manager, GridBeyond
