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EIA raises US coal power forecast for 2024-25

  • Market: Coal, Coking coal, Electricity
  • 09/07/24

Coal-fired generation in the US is expected to be higher this year and in 2025 compared with 2023 levels in response to elevated natural gas prices, government projections released today show.

Coal power will increase by 2.7pc from a year earlier to 688.5bn kWh in 2024, the US Energy Information Administration (EIA) projected in its monthly Short-Term Energy Outlook today. Coal generation in 2025 will then slip to 674.5bn kWh, which would still be slightly higher than 2023's 670.7bn kWh.

The coal generation outlooks for this year and next are both above what EIA projected in June. Today is also the first time this year that EIA said it expected 2024 coal power to top 2023 levels.

"After reviewing the responsiveness of fossil fuel generation to natural gas prices, we now expect more power generation from coal and less from natural gas than we did in our previous forecast, especially during the winter," EIA said.

The agency projected spot natural gas prices at the Henry Hub to average $2.49/mmBtu this year, down from $2.54/mmBtu in 2023. But gas prices in the second half of 2024 will be higher than they were in both the first six months of this year and in the back half of 2023, and prices will continue to rise in 2025. The spot price at the Henry Hub will average $3.29/mmBtu in 2025, EIA projected.

Natural gas-fired generation is expected to inch up by 1.4pc from a year earlier to 1,719.4bn kWh in 2024 but then slide below 2023 levels to 1,695.3bn next year, as the higher prices suppress demand for gas.

EIA said overall US electricity generation was 5pc higher in the first half of 2024 than the same period last year as a result of higher-than-normal temperatures in June and rising demand from some businesses. The agency expects electric power dispatch in the second half of this year to be 2pc higher than in the same period of 2023, and for renewable power to have the greatest rate of growth during that time.

Solar power is forecast to be 121.4bn kWh in the second half of this year, which would be 42pc higher than a year earlier. Wind generation is expected to rise by 12bn kWh, or 6pc, during this time to 208.7bn kWh.

The greater solar and wind generation is at least partly because of more projects coming on line. EIA expects the US to have 127.3GW of solar generating capacity and 155.2GW of wind by the end of this year, compared with 90.2GW and 147.6GW, respectively, in the fourth quarter of 2023.

Coal generating capacity is expected to continue to slip, to 174.3GW in by the end of this year from 177.1GW in the fourth quarter of 2023, according to EIA. Coal's portion of the nation's generating capacity mix will then drop more sharply in 2025 to 162GW as coal-fired plant retirements start to accelerate.

The higher outlook for coal generation this year led EIA to raise its expectations for electric power coal consumption by 3.8pc from the agency's June outlook, to 395.5mn short tons (358.8mn metric tonnes) in 2024. That also would be higher than the 387.2mn st consumed in 2023.

But US coal production is still expected to fall by 12pc this year to 509.7mn st this year.

US thermal coal exports are expected to rise to 53mn st this year and to 55mn st in 2025 from 48.5mn st in 2023. EIA forecast metallurgical coal exports will be about 49mn st in 2024 and 49.2mn st in 2025 compared with 51.3mn st last year.


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