Coal consumption is predicted to continue a months-long downward trend this fall, though it should still account for around a sixth of total U.S. power generation through the end of 2025, according to the U.S. Energy Information Administration.
Per the latest EIA short-term energy outlook, federal energy officials see coal consumption dropping by 12% this month from September, which dropped 22% from August. The drop is attributable to what usually happens during the September and October shoulder season, during which electricity generation is typically reduced.
In November, coal consumption will start to tick back up, the EIA says, adding that coal consumption should increase by 32% as the winter season begins, power demand rises and forecast natural gas prices approach $3.20/MMBtu while coal prices remain relatively low.
Per the EIA, coal remains a significant fuel source for U.S. power generation in the mid-Atlantic and Midwest. Natural gas, however, has become more cost-competitive over the past decade due to the greater thermal efficiency of combined-cycle natural gas turbine plants.
“The higher energy yield that comes with lower heat rates means that the effective price of natural gas relative to coal is even lower than the nominal price indicates,” the EIA says. “However, with increases in electricity demand expected from the growth of data centers and other sources, we expect overall electric power sector coal consumption to increase from this year, even as coal production declines in 2025.”
With the increase in consumption and decrease in production, coal inventories held by electric power plants are predicted to fall to about 100 MMst by December 2025 from the 130 MMst predicted for the end of 2024.
Solar-generating capacity will approach the amount of U.S. coal-fired capacity by the end of 2025, though coal power plants tend to run at higher utilization rates over time, according to the EIA.
“We expect that coal will account for about 16% of total U.S. generation in 2024 and 2025, down from 17% last year,” the EIA says.
Increasing generation from new solar is predicted to most likely affect natural gas generation, which the EIA says will fall from 42% of U.S. generation in 2024 to 39% in 2025. Additionally, the administration forecasts less natural gas generation next year as a result of rising natural gas prices as well as little new generating capacity coming online.