Energy Outlook Winter 2023-2024

With cooler weather upon us and the winter season looming on the horizon, it is the ideal time to consider the volatility that winter storms and cold weather can bring to your energy bill.  For businesses, heating your facilities could be one of your largest expenses, so it is never too early to consider ways to prepare and methods to prevent these unexpected energy costs. Let’s dive into the current energy market and projected 2023-2024 winter weather forecast to prepare you for what to expect this winter season.

Current Energy Market

Natural gas and electricity prices were relatively flat for much of the summer, after falling dramatically from 2022 levels brought on in part by the war in Ukraine. Above-average summer temperatures, particularly in the South, reduced natural gas storage levels to within 6% of the five-year average, causing natural gas and electricity prices to increase as we approach the winter heating season.  Internationally, demand for relatively inexpensive U.S. liquefied natural gas remains strong as Europe continues to replace natural gas previously bought from Russia.

2023-2024 Winter Forecast

The National Oceanic and Atmospheric Administration (NOAA) is predicting a strengthening El Niño to play a significant role in weather across the United States this winter. A strengthening El Niño weather pattern generally brings warmer-than-average winter temperatures and below-average precipitation to the northern tier of the country and increased precipitation to the South and Southeast. While anticipating a drier season in the northern tier of the US, this does not mean a complete scarcity of winter storms and cold weather. Increased precipitation in the southern tier does mean a stronger chance of tumultuous weather patterns and severe weather outbreaks in the south.

Preparing for Winter Weather

Demand for electricity and natural gas in the winter months is generally second only to the summer months.  Fierce winter storms can stress the electricity grid with both high demand along with the potential for some power generating plants to go offline, as we saw with Winter Storm Uri in 2021 and Winter Storm Elliott in late 2022.  A spike in heating demand generally means pricing would rise coincidingly.  

Although it’s important to understand the strain winter weather can cause on your energy costs, that doesn’t mean you can’t soften the blow. For starters, look at your current energy contracts in place to ensure they are not expiring during the height of the winter season, when pricing could be at its peak. By looking ahead of time, you can avoid renewing during peak demand season and have access to more ideal pricing. Participating in a demand response program can reduce your business’s energy usage during pivotal times of high stress on the electric grid and can be financially rewarding as a result. If you can, take it a step further and run any energy intensive machines during off peak hours such as the evening or early morning hours.

Additionally, have a professional perform an energy audit for your facility. This professional would examine all aspects of energy your facility uses such as your current lighting, heating system, or potential air duct leaks. By identifying these areas, you can either upgrade to more efficient systems or set a baseline for energy reduction.

Key Takeaway

When examining the effects of the upcoming winter season, the best advice is to start early. While weather is unpredictable and brings unexpected energy costs, you have time to prepare and educate yourself on areas to reduce your energy usage. If you want to discuss energy management techniques, contact an APPI Energy consultant to schedule a no-cost, no-obligation complimentary assessment at 800.520.6685 or contact us.