Electricity, coal, and renewables

Electricity generation
Increased generation from renewable energy is the main contributor to growth in U.S. electricity generation over the STEO forecast. In particular, we expect U.S. solar-powered generation by the electric power sector to increase by 35% in 2025 and by 18% in 2026.

Overall electricity generation tends to reach its lowest point of the year during the spring months when demand is lowest and power plants undergo routine maintenance. However, generation from conventional hydropower typically is highest during the second quarter when water runoff from snowmelt reaches its peak. In the spring of 2024, a drought in the northwestern states led to much lower-than-normal levels of hydro generation. We expect closer-to-normal levels of water supply this year will raise hydro generation by 18% in the second quarter of 2025 (2Q25) compared with 2Q24 and annual generation by 7% in 2025 compared with last year. However, actual levels of hydro generation over the upcoming months will depend on various factors including temperature, precipitation patterns, reservoir levels, and water management restrictions.

Wholesale power prices
Higher natural gas fuel costs compared with last year will likely lead to higher wholesale power prices in 2025. We expect the load-weighted average of the 11 regional wholesale prices tracked in the STEO will be $45 per megawatthour (MWh) in 2025, up 19% from the 2024 average. We expect the highest prices will occur in the New England and New York power markets where natural gas prices are more volatile. Forecast wholesale power prices decline in the Northwest due to increased hydroelectric generation.

Coal markets
We have revised our forecast of coal exports downward to reflect China’s April 4 decision to impose a 34% reciprocal tariff on U.S. imports. We forecast U.S. metallurgical coal exports will total 44 million short tons (MMst) and U.S. steam coal exports will total 49 MMst in 2025. Total exports this year are 93 MMst compared with 97 MMst in the March STEO. We expect metallurgical coal exports will recover to 46 MMst in 2026 as global markets rebalance, while we expect steam coal exports to fall to 47 MMst as continued strength in natural gas prices steer more of the thermal coal disposition to the domestic market.

We have increased our forecast of U.S. coal production to almost 490 million short tons (MMst) in 2025 compared with about 480 MMst in the March STEO, after stronger-than-expected production in March. Compared with our January 2025 STEO, most of the increase in production is from the Western region, with incremental production from Appalachia and the Interior regions as well. The effect of higher gas prices is more pronounced in Appalachia, given its higher mining costs, and in the Western region, where transportation costs are more significant because the lower heat content in its subbituminous coal means power plants need more coal to generate a given amount of electricity. We forecast coal production in the Appalachian region will total 145 MMst in 2025 compared with the 142 MMst that was forecast in the January STEO. We also expect production in the Western region to total 267 MMst in 2025, compared with 259 MMst in the January STEO. Our 2025 forecast of Interior region production, where coal is cheaper to mine and is mostly consumed locally, is 78 MMst, up from our January STEO forecast of 76 MMst.

We expect U.S. power plants will consume 4% more coal this year than they did in 2024, but we expect U.S. coal production will drop by 4%. With consumption growing and production falling, we expect coal stocks at electric power plants in the U.S. to finish 2025 at 104 MMst, a drop of 19% from the end of 2024. Despite the significant withdrawals from coal stockpiles in our forecast, we revised higher our expectations of year-end coal stocks compared with last month’s STEO because we now expect more coal production this year.