Natural gas-fired power generation across all sectors averaged 5.0 million megawatthours (MWh) per day in June 2021, 4% higher than the previous average June record set in 2020 reported the U.S. Energy Information Administration’s Electric Power Monthly.
Despite daily natural gas spot prices at the Henry Hub averaging $3.26 per million British thermal units (MMBtu)—twice as high as prices in June 2020—natural gas-fired generation maintained its share of the fuel generation mix, accounting for 40% of electricity generated that month. The Henry Hub is the delivery point for natural gas futures traded on the NYMEX and a benchmark that reflects supply-demand balance in the North American natural gas market.
June 2021 was the hottest June on record for the Lower 48 states with an average temperature of 72.6°F, surpassing the previous June record, set in 2016, by almost 1°F. Space cooling demand drove record levels of electric power generation, which in turn led to record power burn.
According to the EIA’s Hourly Electric Grid Monitor, during the second and third weeks of June 2021 (June 7–20), natural gas-fired generation increased 13% year over year as the western United States experienced a record-breaking heatwave. With the increase in natural gas consumed by electric power generators to meet cooling demand, Henry Hub prices increased during this period. Henry Hub natural gas spot prices rose 25¢/MMBtu from $2.98/MMBtu on June 7 to $3.23/MMBtu on June 20.
Much of the Lower 48 states experienced another record-setting heatwave in late June, when the Pacific Northwest experienced daily maximum temperatures in excess of 100°F, 20-30°F above normal, setting all-time records in Oregon and Washington.
Meanwhile, much of California and the Northeast saw daily maximum temperatures 8-14°F above normal. From June 28 through June 30, daily U.S. natural gas-fired power generation averaged 16% higher than the previous daily record over the past three years set for those days in June 2020. The natural gas share of the fuel generation mix increased to 42% over this period despite Henry Hub natural gas spot prices averaging $3.72/MMBtu on these days.
Although natural gas spot prices averaged $3.72/MMBtu this summer (June–August) and rose above $4.00/MMBtu over several weeks, EIA’s September Short-Term Energy Outlook forecast natural gas-fueled power plants still accounted for 40% of electric power generation over the months of June, July, and August. This level would be only 2 percentage points lower than last summer when Henry Hub natural gas prices averaged $1.90/MMBtu.
Source: EIA