Electricity, coal, and renewables

Electricity consumption
We forecast sales of electricity to U.S. end-use customers will increase by 2% in 2024 compared with 2023 and by 1% in 2025. The expected growth contrasts with a 2% decrease in electricity sales in 2023 compared with 2022. We expect electricity consumption to grow in all major consuming sectors this year, with forecast growth especially strong in the residential sector, where we expect it to increase by 4%. Much of the forecast year-over-year growth in residential electricity occurs this summer. We expect a hotter summer this year, with 7% more forecast cooling degree days in 2Q24 and 3Q24 than the same quarters in 2023.

U.S. electricity sales to non-residential customers in the commercial and industrial sectors grow in the forecast by 2% annually in 2024 and 1% in 2025. In some regions, we expect relatively little growth in non-residential electricity demand because vacancies in office buildings remain high compared with pre-pandemic levels. Areas of the country with concentrations of new large computing customers, such as data centers, have the fastest forecast growth in total non-residential electricity consumption; we expect the West South Central and West North Central Census Divisions together will contribute 50% of total U.S. non-residential electricity sales growth in 2024 and almost 90% of growth in 2025.

Electricity generation
Generation from renewable energy sources is the main contributor to growth in U.S. electricity generation over the STEO forecast. In particular, the electric power sector added 19 gigawatts (GW) of solar capacity in 2023 (a 27% increase), and we expect 37 GW will be added in 2024 and another 32 GW will be added in 2025. With this new capacity, we expect solar will provide 6% of total U.S. electricity generation in 2024 and 7% in 2025, up from a 4% share in 2023.

The increased generation from solar is likely to slow growth in generation from natural gas-fired power plants, even with relatively low natural gas prices in the forecast. We expect the share of total U.S. natural gas-fired generation in 2024 to average 42%, similar to 2023, before declining to 41% in 2025. We don’t expect any new combined-cycle gas turbine plants in 2024, another reason why natural gas-fired generation makes up a smaller portion of electricity generation. Low natural gas prices will continue to reduce coal-fired generation; the forecast U.S. coal generation share falls to 15% in 2024 and 14% in 2025, compared with 17% last year.

Coal markets
After the Port of Baltimore was closed as a result of the collapse of the Francis Scott Key bridge, we reduced our forecast for U.S. coal exports by almost 3 million short tons (MMst)—more than 30%-in April and 2 MMst—about 20%--in May compared with the March STEO. The port is the second-largest export hub for coal in the United States.

We do not expect this event to have a significant long-term impact on U.S. exports coal exports. The price and quality of coal are important factors contributing to international demand for U.S. coal, and we assume some coal previously exported from Baltimore will be shipped from other U.S. ports. However, with the full closure of the port of Baltimore through at least May, as well as uncertainty around when the port will fully open and how long it will take to clear bottlenecks, we expect U.S. coal exports to total 94 MMst in 2024 down 6% relative to the March STEO. We expect exports in 2025 to increase to 105 MMst in 2025, similar to our forecast in the March STEO.

As a result of growth in electricity generation from renewable sources and low natural gas prices we expect coal-fired generation to decline, resulting in the electric power sector’s coal consumption to decline by 8% in 2024 and to further decline by 5% in 2025. As exports temporarily drop in 2Q24 and electric power consumption declines, we forecast coal production to be 5% lower in April and 4% lower in May compared with the March STEO. With exports and consumption both down relative to the March STEO, we have lowered our forecast for coal production in 2024 to about 485 MMst.