Electricity, coal, and renewables

Electricity generation
Total electricity generation from all sectors in 2025 is likely to reach more than 4,400 billion kilowatthours (BkWh), a 2% year-over-year increase from last year. We expect utility-scale renewable sources, including conventional hydropower, to generate 9% more electricity in 2025 compared with last year, bringing utility-scale renewables generation above 1,000 BkWh. This total does not include electricity supply from small-scale solar sources.

We forecast electricity generation from small-scale solar to continue growing through 2026, contributing more than 90 BkWh in 2025 and almost 110 BkWh in 2026. On a monthly basis, total solar electricity supply from both small-scale solar and utility-scale solar first surpassed wind in July and August 2024. In 2025 and 2026, electricity supply from solar resources is expected to surpass wind resources from May through September.

Total solar electricity supply in our forecast is 380 BkWh in 2025, including small-scale solar, while wind generates 470 BkWh. In 2026, we expect solar will generate 17% more electricity than it has this year, approaching 450 BkWh. Wind generates 490 BkWh in our forecast for 2026, 5% more than this year.

Most of the small-scale solar capacity, which is defined as being less than 1 megawatt, comes from the residential sector. In 2025, 68% of small-scale solar will come from rooftop solar installations in the residential sector. Total capacity is expected to be 60 gigawatts (GW) in 2025 and 67 GW in 2026.

Coal markets
During the first half of 2025 (1H25), the U.S. electric power sector consumed 199 million short tons (MMst) of coal, which was 15% more than the amount consumed in 1H24. This increase was driven by more overall electricity demand and by higher costs for natural gas generation, which is a competing electricity generation source in many areas of the country. We expect that U.S. coal consumption during 2H25 will be about 4% higher than in 2H24, reflecting lower prices for natural gas compared with earlier in the year.

The winter months in early 2025 were relatively cold, especially in January in the Southeast where many households use electricity for space heating. The cold weather resulted in more coal-fired power plants generating electricity than in the milder winter of 2024.

The price of natural gas delivered to electric generators during 1H25 averaged $4.17/MMBtu, which was 46% higher than in the same period in 2024. We forecast that the delivered price of natural gas in 2H25 will average about $3.40/MMBtu, which is 27% higher than a year earlier.

In 2026, we forecast the U.S. power sector will consume 390 MMst of coal, about 3% less than 2025 annual consumption. Although natural gas prices paid by electric generators in our forecast rise by 10% next year, we expect that increased generation from new utility-scale solar facilities, particularly in the Midwest, will lead to less output from coal-fired plants.

The electric power sector is reporting to us that it expects to retire about 4% of existing coal-fired generating capacity by the end of 2025. This reported decrease also contributes to our expectation that less coal will be consumed in 2026. However, recent announcements by the Department of Energy to invest in America’s coal industry could affect plant retirement decisions and encourage more coal-fired generation.