-- US electricity demand is continuing to rise, fueled by the rapid expansion of data centers and artificial intelligence infrastructure, but the impact on natural gas consumption is likely to be delayed, according to Christian Drolshagen, analyst at Aegis Hedging in a Thursday note.
Drolshagen said renewable energy growth is expected to offset much of the near-term gains in power demand, limiting upside for gas-fired generation.
Power consumption across the Lower 48 states is projected to increase modestly in the coming years.
The US Energy Information Administration forecasts demand in summer 2026 will rise about 2% from 2025 levels, with a stronger 3.4% increase expected in 2027.
Despite this upward trend, Drolshagen noted that a surge in solar and utility-scale battery installations is reshaping the generation mix.
Solar capacity continues to expand rapidly, directly competing with natural gas during daytime hours, while battery storage increasingly displaces less efficient gas-fired peaker plants in the evening.
As a result, natural gas demand in the power sector is expected to remain flat or slightly lower this summer compared with 2025 levels, assuming typical weather conditions. However, hotter-than-average temperatures could still lift gas demand due to increased cooling needs.
Looking further ahead, the outlook shifts after 2027, when electricity demand growth is expected to begin outpacing renewable additions. That dynamic could lead to a modest increase in gas consumption in the power sector.
At the same time, rising demand for LNG exports is projected to boost feedgas requirements, potentially supporting US natural gas prices toward the end of the decade, the note said.