Electricity, coal, and renewables

Electricity generation
Electricity generation has been trending upwards in recent years after a decade of relatively flat growth. Between 2010 and 2020, U.S. electricity generation fell by an average of 0.3% per year. Since 2021, electricity generation has grown about 2% per year. We forecast U.S. generation will grow by 2.4% in 2025 and by 1.7% in 2026.

Much of the recent growth in generation has been driven by increasing demand for electricity from data centers and other large customers in Texas where the grid is managed by the Electric Reliability Council of Texas (ERCOT) and in the Mid-Atlantic/Ohio Valley region where the grid is managed by the PJM Interconnection.

We expect that electricity demand in PJM will grow by 3.3% in both 2025 and 2026, while demand in ERCOT grows by 5.0% in 2025 and 9.6% in 2026. We have revised our forecast of ERCOT’s growth rates down from the November STEO (which were 6.0% and 15.7%, respectively) based on how much large load electricity demand has come online so far this year and its implications for near-term growth.

Changes in the mix of energy sources used for electricity generation are expected for these two fastest-growing regions. The largest source in both regions is natural gas, which we forecast will grow by 2% in both regions between 2024 and 2026. We expect most of the growing electricity demand in the PJM region will be met by growing generation from coal and solar, up 23% and 63%, respectively, between 2024 and 2026. In ERCOT, the fastest growing energy source is solar, which we forecast will grow by 92% between 2024 and 2026.

Coal markets
We expect coal consumption to total 448 million short tons (MMst) in 2025, a 9% increase compared with 2024. The increase is mostly driven by an 11% increase in electric power consumption in the United States, which accounts for approximately 90% of total coal consumption. The power sector’s consumption of coal has increased this year as the average cost of natural gas in the electric power sector increased over 40% compared with 2024. More overall electricity demand has also supported coal consumption this year. As domestic demand for coal increased, exports decreased in absolute terms and as a share of total U.S. coal disposition. We estimate that both steam and metallurgical exports will fall 11% in 2025, decreasing the share of exports in total U.S. coal disposition from 21% in 2024 to 18% in 2025. The drop in coal exports reflects relatively weak global prices driven by oversupply and soft demand.

We expect this trend to reverse in 2026, as domestic coal consumption falls by 5%, due to lower coal consumption in the U.S. electric power sector, while exports rise 1%. The rise in exports reflects an 8% increase in metallurgical exports due to the long wall expansion at the Blue Creek mine in Alabama and the reopening of the Leer South and Longview mines in West Virginia. We expect supply reductions among other metallurgic coal exporters next year will help support prices and an increase in U.S. exports. Steam coal exports, which are subject to lower global prices and typically sell at a high discount relative to metallurgical coal exports, are forecast to fall by 6% in 2026.