Michigan’s Winter Energy Report Projects Higher Natural Gas Use Driven by Demand for Power Generation

The Michigan Public Service Commission’s 2024-2025 Winter Energy Appraisal, released on Dec. 5, forecasts a rise in electricity demand among residential and commercial customers. While natural gas demand for residential heating is expected to remain steady, overall demand is projected to rise due to higher usage for electricity generation. Overall electricity demand is projected to increase by 2 percent and natural gas demand by 3.8 percent.

The report details that natural gas consumption will increase to 1.09 trillion cubic feet (Tcf) under normal winter weather conditions. This 3.8 percent increase in natural gas demand is due to an 11.5 percent increase in natural gas consumption for power generation.

However, projected natural gas use among residential consumers is expected to remain flat. The report projects a 2.2 percent decrease in the commercial sector and a 3.3 percent decrease in the industrial sector. Natural gas accounts for almost 77 percent of residential heating fuel.

This year, Michigan’s gas storage capacity is around 528 billion cubic feet (Bcf), a 5.8 percent decrease from last year’s levels. Michigan also has the highest underground natural gas storage capacity in the U.S., having 10 percent of the nation’s available underground storage capacity.

The projected demand for electricity in 2024 will be 99.5 terawatt-hours (TWh), a 2 percent increase compared to 2023. While residential and commercial demand for electricity will increase, the commission forecasts a lower industrial demand.

The commission does not anticipate supply shortages for electricity this winter, based on information from independent system operators. In September, the commission took steps to strengthen the state’s electricity distribution planning process, directing utilities to address climate risks in their scenario evaluation and distribution plans. The commission also instructed its Financial Incentives and Disincentives workgroup to optimize the transition to clean energy sources, utilizing appropriate metrics for distributed energy resources.