Electricity, Coal, and Renewables

Electricity generation
The amount of electricity generated in the United States has been growing consistently in recent years to meet increasing power demand from data centers. On August 3, the Texas governor announced a pause on new data center development in order to collect more information about projects that are currently undergoing review. As a result, we have lowered our forecast for electricity demand in Texas, with electricity load growing by 6% in 2027 in contrast to our forecast of 14% growth in the previous STEO.

Generation from new solar power projects and rising generation from natural gas have been the leading sources of growth so far in 2026, and we expect that pattern to continue over the next year.

During the first half of 2026 (1H26), total generation by the U.S. electric power sector was up 37 billion kilowatthours (BkWh), or 1.8%, compared with the first six months of 2025. Generation from solar and wind was up 21% and 6%, respectively, in 1H26, reflecting continuing growth in renewable energy generating capacity. We expect that new additions of generating capacity, including the new 3.7 gigawatt SunZia wind farm, will keep U.S. renewable generation growing at similar rates in 2H26 and throughout 2027. Hydropower generation during 1H26 was up 9% compared to 1H25, but we forecast a 3% decrease in 2H26 because of intensifying drought conditions in the western United States.

Natural gas-fired electricity generation has been rising this year as well, in contrast to year-over-year declines that occurred in 2025 as natural gas prices were up sharply last year. We expect the Henry Hub price of natural gas will average 2% lower in 2026 and 4% lower in 2027. This contributes to our forecast that U.S. natural gas generation will rise by 30 BkWh (2%) in 2026 and by 44 BkWh (3%) in 2027.

With the shift to lower-cost natural gas, coal-fired generation has been declining. During 1H26, U.S. coal generation was down 39 BkWh (11%), reversing the increases that occurred in 2025. And we expect another year-over-year decline of 15 BkWh (4%) in 2H26. We forecast the declines in coal generation to slow somewhat in 2027, falling by 18 BkWh (3%) for the year.

Coal markets

Total U.S. coal exports increased by 32% year-over-year in June. As a result, we have raised our forecast of U.S. coal exports in 2026 to 102 million short tons MMst, compared with 98 MMst in our July STEO. Metallurgical coal exports increased year-over-year in each of the first six months of 2026, which likely reflects the opening of Warrior Met Coals’ Blue Creek mine, as well as the reopening of Allegheny Metallurgical’s Longview mine and Core Natural Resources’ Leer South mine.

Steam coal exports declined by an average of 11% year-over-year in the first three months of 2026 but then increased as global coal market dynamics favored incremental sales by U.S. coal exporters in April, May, and June. Global coal prices rose in May and remained elevated through June because of seasonal restocking, tighter supply, and uncertainty surrounding the conflict in Iran. Moreover, higher gas prices resulting from the Strait of Hormuz conflict led to natural gas-to-coal switching in Europe and Asia. Changes in weather and a rise in solar and wind curtailments in China also contributed to increased global coal utilization in the first half of 2026.