Electricity, coal, and renewables

Electricity sales
We expect electricity sales to ultimate customers in the United States to increase 2.4% in 2025 and 2.6% in 2026, after rising 2.6% in 2024. Electricity sales will rise in nearly all regions in 2025 and 2026, but growth is particularly concentrated in the West South Central region, which includes Texas, Oklahoma, Louisiana, and Arkansas. We forecast that electricity sales will grow 4.4% in the West South Central region in 2025 and by 9.2% in 2026. These increases contribute 34% of the growth in U.S. electricity sales in 2025 and 66% of the growth in U.S. electricity sales in 2026. Much of the growth in this region is due to rising electricity demand from data centers and cryptocurrency mining facilities that are coming online, or are expected to come online, in the regional market that is managed by the Electric Reliability Council of Texas (ERCOT), which is located within the broader West South Central region.

We expect sales of electricity to commercial customers in the West South Central region will rise by 6% in 2025 and 17% in 2026, accounting for 61% of the expected nationwide growth in electricity sales next year. We expect electricity sales to industrial customers in the region will grow by 4% in 2025 and 11% in 2026, accounting for 81% of the nationwide sales to the industrial sector growth next year. Our expectations for growth in electricity sales in this region is consistent with ERCOT’s forecasts of load in the years to come.

Wholesale electricity prices
Increases in wholesale electricity prices in ERCOT drive forecast increases in overall U.S. wholesale electricity prices next year. We expect that the load-weighted average of the 11 regional wholesale prices tracked in the Short-Term Energy Outlook will be $47 per megawatthour (MWh) in 2025, which is 23% higher than the 2024 average. We expect this price to rise to $51/MWh in 2026. This 8% rise in the wholesale price is driven mostly by the ERCOT North pricing hub, where we forecast the wholesale electricity will increase 45% in 2026 after rising 21% in 2025. Natural gas prices tend to be the biggest determinant of power prices, among numerous other factors that typically influence the wholesale power price. But in 2026, the increase in power prices in ERCOT tends to reflect large hourly spikes in the summer months due to high demand combined with relatively low supply in this region.

Coal markets
We estimate U.S. coal production in the third quarter of 2025 (3Q25) reached 141 million short tons (MMst), the highest level since 3Q23 and a 10% increase from 2Q25. About half of the production increases came from the Western region. We expect production will fall to 125 MMst in 4Q25, down 3% from a year earlier. Overall, we anticipate 2025 production will total 526 MMst, a 3% increase from 2024. The coal production increase in 2025 results from rising demand for coal, which can be attributed to a few factors. These factors include an increase in natural gas prices particularly in the first half of the year, delayed coal plant retirements, and strong demand for heating in the earlier winter months this year. In response to higher demand, we expect electric power coal inventories to end the year at 107 MMst, which is 17% lower than at the end of 2024.

We expect 2026 total production to fall by 3% to 509 MMst. Although we expect production to drop, our forecast is 15 MMst higher than in the October STEO. The increased production forecast in 2026 reflects several factors. First, we now expect coal-fired power plants will hold 13% more coal in stockpiles at the end of next year than we forecast last month. We have raised our forecast for coal inventories compared with last month’s forecast to account for ongoing changes in coal markets that raise the likelihood plants will keep more coal in inventory. Based on what power plant operators are reporting to us on our 860M survey, we now expect about 3 gigawatts more coal-fired generation capacity will be operational next year compared with what we had assumed earlier this year. Moreover, our expectations for electricity demand have been rising, and we expect a 2.6% increase in electricity sales to ultimate customers next year. Also, we anticipate higher production from the reopening of the Allegheny Metallurgical’s Longview, Core Natural Resources’ Leer South, and Warrior Met Coals’ Blue Creek mines. The increase in production in these coal mines led us to raise our forecast of metallurgical coal exports in 2026 by 9% compared with 2025 levels. The possibility of a weaker dollar and higher metallurgical coal prices creates further upside for U.S. met coal exports in 2026 that provides further impetus to coal production.