Electricity, coal, and renewables

Electricity consumption
We forecast that consumption of electricity in the United States will increase by 3% in 2024 and by 2% in 2025. This growth reflects more demand for air conditioning based on our assumption of warmer temperatures in the forecast, along with more electricity use related to the expansion of data centers.

We expect that U.S. retail sales of electricity to residential end-use customers in 2024 will be 3% higher than 2023 as a result of more electricity use for air conditioning this summer and more heating demand in the winter months. Residential electricity sales grow by a further 2% in 2025.

We forecast that retail sales of electricity to customers in the U.S. commercial and industrial sectors will each grow by about 3% in 2024, followed by a 1% increase in commercial electricity sales and a 4% increase in industrial sales in 2025. We have revised our electricity consumption forecasts slightly upwards to reflect adjustments to our expectations of power demand from data center customers. In the May STEO, we had forecast U.S. commercial sector electricity sales to increase less than 2% in 2024 and decline slightly in 2025.

The largest revisions to the forecast are in the South Atlantic and West South Central regions, which together account for 40% of U.S. commercial electricity demand. We now expect that commercial consumption in the South Atlantic will rise by 5% in 2024 and 2% in 2025, while West South Central demand will increase 3% this year and 1% next year. Data center developments are evolving rapidly, and we plan to re-evaluate our upcoming forecasts as we receive more information.

Electricity generation
We expect that U.S. electricity generation will grow by 3%, or 130 billion kilowatthours (BkWh), in 2024 and by 1%, or 40 BkWh, in 2025. The largest source of increase in power generation is coming from renewable energy sources, with solar alone accounting for more than 70% of the increase in U.S. generation. We expect that the U.S. electric power sector will use solar energy to produce 5% of all U.S. generation in 2024 and 7% in 2025, up from a generation share of 4% in 2023. Wind power’s contribution to generation growth is beginning to flatten. Although we expect wind generation to increase by 5% in 2024 and 3% in 2025, because of growth in other generation sources, its share remains at 11% of total generation in both 2024 and 2025, similar to 2023.

Natural gas provides a forecast 42% of U.S. generation in 2024, the largest share and about the same as last year. We forecast the natural gas share to fall to 41% in 2025 in response to growing generation from renewables and relatively little new natural gas-fired capacity coming online. The forecast share of generation from coal falls from 17% in 2023 to 16% this year and 15% in 2025, with 15 gigawatts of coal-fired capacity set to be retired through the end of next year.

Coal markets
With an upward revision in our forecast of U.S. electricity demand as well as expected increases in the price of natural gas, we forecast that coal consumption by the electric power sector will total more than 380 million short tons (MMst) in 2024 and about 360 MMst in 2025. This amount is still less than electric power consumption of 387 MMst in 2023, but it represents a slight increase from our forecast in the May STEO.

We expect that the increase in U.S. consumption of coal this summer will reduce electric power coal stocks to between 110 MMst and 115 MMst in August before stocks begin to accumulate again, reaching more than 130 MMst in December 2024 and almost 140 MMst in December 2025. Meanwhile, we forecast U.S. coal production will total almost 510 MMst in 2024 and fall to 500 MMst in 2025.

Export traffic has returned to the Port of Baltimore. As of June 10, the full 700-foot-wide and 50-foot-depth channel is available for commercial vessels. With the U.S. Census Bureau reporting another strong month of metallurgical exports in April, we have increased our forecast of metallurgical exports slightly to 50 MMst in 2024. We expect all coal exports to total more than 100 MMst in 2024, up 3% from 2023 and slightly more than our May STEO forecast, with exports again increasing about 3% in 2025.