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Electricity Monthly Update

With Data for March 2021 Release Date: May 25, 2021 Next Release Date: June 24, 2021

Highlights: March 2021

Key indicators

Winter 2020/2021 upturn in coal generation produces record draw on coal stocks

Source: U.S. Energy Information Administration, Form EIA-930, Hourly Electric Grid Monitor.
Note: Daily generation data are for Lower 48 states.

Rising prices for natural gas in late 2020 and into early 2021 contributed to increased electricity generation from U.S. coal-fired electric generating units after historic lows. Coal-fired generation increased 16% from December 2020 through January 2021 from its level for that period last year, as coal was able to displace natural gas-fired generation in select markets. Coal-fired generation increased even further by more than 50% in February 2021, when a winter storm boosted electricity demand, causing a spike in natural gas prices across the Midwest. From February 8 through February 19, 2021, daily coal-fired generation reached its highest level for the 12-month period between March 2020 and February 2021, ranging from 3,433,791 megawatthours (MWh) on February 10 to 3,821,075 MWh on February 13. The rise in coal-fired generation resulted in power companies significantly lowering their coal stocks during all three months, including a record high draw of nearly 16 million tons during February 2021.

Source: U.S. Energy Information Administration, Monthly Energy Review, Table 6.1, Coal Overview.
Note: Data for January 2020 through February 2021 are preliminary.

Prior to the surge in coal-fired generation in late 2020 and early 2021, U.S. coal production had been relatively low. Coal production was down due to extremely low natural gas prices during the first half of 2020, weak electricity demand due to COVID-related impacts, and temporary mine closures because of COVID restrictions. In fact, preliminary estimates indicate that U.S. coal production for 2020 totaled 534 million tons, the lowest annual amount since 1956. The 115 million tons mined from April to June 2020 represent the third-lowest amount for a three-month period since 1973. Because of the low production during 2020, the coal mining industry was not ready to meet the sudden demand for coal, leading to the heavy draw on coal stocks. Even though production was low, coal stocks were above the average range in late 2020. The ability to draw from stocks located onsite enabled most plant owners to respond quickly to price signals in the wholesale power market.

Source: U.S. Energy Information Administration, Form EIA-923, Power Plant Operations Report.
Note: Data for January 2020 through February 2021 are preliminary. Data for December 2019 are final.

Typically, most coal stock draws occur during the summer months—when coal-fired generation is at its highest. Heavy inventory draws are less common during the winter months, unless extreme weather events occur, such as the winter storm in Texas and neighboring states in February 2021. During the February winter storm, substantial coal stocks enabled the fuel to provide a buffer in the power market when natural gas was either priced out of the market or was physically unavailable for delivery to all power plants.

Source: U.S. Energy Information Administration, Form EIA-923, Power Plant Operations Report.
Note: The chart shows the difference in stock drawdowns in winter 2020-21 versus a more typical winter in 2019-20 when stocks increased. Data for January 2020 through February 2021 are preliminary; all other data are final.

The large stock draw in February 2021 left total coal stocks at around 110 million tons for the utility industry at the end of the month. That amount is within a more normal range, and it is well below the 139 million tons that were on hand at the end of February 2020. Weak coal demand during the winter of 2019–20, combined with higher production, resulted in excessive stocks last year. Lower coal inventory levels at the end of February 2021 could result in some power companies building stocks during the spring months in order to be ready for the strong summer demand.