U.S. gas power burn to stay flat this summer despite rising electricity demand, EIA says
Renewables are absorbing near-term demand growth, but a $50 billion gas turbine buildout signals where U.S. power markets are headed by 2027.
U.S. wholesale electricity prices will average $45 per megawatt-hour this summer, down $4 from last year's composite level, the EIA said in its July Short-Term Energy Outlook published Thursday (2026-07-02) — a decline that reflects a specific constraint on gas-fired generators rather than weak demand overall.7
Overall electricity demand is growing roughly 2% this summer, but natural gas's share of generation is projected to stay flat, with renewable capacity filling most of the incremental load. For traders in ERCOT and MISO, that means the summer power-burn story carries less upward force for gas prices than the headline demand numbers suggest. NYMEX Henry Hub front-month stood at $2.88/MMBtu early Monday (2026-07-20).4,7
The near-term picture sits against a longer investment signal that is harder to square with current strip pricing. According to the IEA, U.S. companies placed orders for roughly 20 gigawatts of gas turbine generation capacity in the first quarter of 2026 alone. Total U.S. spending on coal and natural gas power this year is estimated at $50 billion — a figure that, for the first time in decades, would exceed China's comparable spending on the same fuels by about $3 billion, the IEA said as quoted by the Financial Times.6
That gap reflects different positions in the energy transition. China's thermal power generation, drawn mostly from coal with gas contributing a smaller share, reached 6.34 trillion kilowatt-hours in 2024, up 1.5% on the previous year, according to official data released Friday (2026-05-15). Growth slowed to its lowest rate in nine years outside of the pandemic era, yet coal generation still rose when projections had forecast a plateau. Greenpeace analysts forecast that renewables could absorb all of China's new power demand growth in 2025, but the actual trajectory of coal burn in 2024 keeps that thesis provisional.1
On the supply side, U.S. marketed natural gas production averaged 120.2 billion cubic feet per day in the first quarter of 2026, up 4% from the same period a year earlier, EIA data show. The agency expects production to keep rising through 2027, with associated gas volumes climbing alongside higher crude oil prices. Morgan Stanley, as reported in a June (2026-06-04) analysis, forecast Lower 48 supply growth of roughly 3 billion cubic feet per day this year as output recovers from spring maintenance disruptions.3,5
That production trajectory explains the timing mismatch in gas markets. Expanding supply is cushioning the market from power-sector demand growth this summer, keeping prices contained. The 2027 record consumption forecast rests on a different equation: as renewable capacity additions slow relative to load growth, and as data center demand accumulates, gas-fired generation will need to fill a larger share. The EIA's long-run modelling, published in May (2026-05-19), projects data center server electricity consumption could reach between 22% and 33% of all commercial building power use by 2050, with medium-term growth visible well before that horizon.4,2
The tension between those two time frames — flat gas burn in 2026, record projected demand in 2027 — runs through current positioning. A June (2026-06-04) market analysis put it plainly: natural gas bulls have a 2026 story, bears have a 2027 story. The 20 GW of turbine orders placed in Q1 2026 won't reach commercial operation for several years. That order book is a signal of where utilities and independent power producers expect the market to be once the current renewable build slows — not a near-term demand driver.5,6
For ERCOT and MISO traders, the dominant read through mid-July (2026-07-08) was bearish, with 22 separate market signals aligned in that direction. The $45/MWh summer composite, if it holds, represents a $4 per megawatt-hour discount to last year — compression that reflects both new renewable generation and supply growth in the gas market itself. The variable is whether data center load growth accelerates faster than the EIA's base case. Server electricity consumption already accounted for an estimated 7% of commercial sector usage in 2025, and the slope of growth through the late 2020s will determine how much of the 2027 record demand forecast arrives on schedule — and how much of that 20 GW order backlog is actually needed.7,2