It’s no secret that low gas prices, as well as increased solar and wind generation, have made coal-fired power less and less competitive.
This has created headaches and financial implications for coal plant operators, according to the Institute for Energy Economics and Financial Analysis (IEEFA).
Over the last two years, U.S. utilities and power producers have collectively accumulated a 138-million-ton stockpile of unused coal at their plants, IEEFA cited from the U.S. Energy Information Administration (EIA) in a recent analysis.
The stockpile matches the entire amount of coal that Appalachia is expected to produce in 2025 and represents $6.5 billion of unused inventory at a time when coal is rapidly being displaced by renewables, IEEFA said.
The $6.5 billion figure is based on a $47.22 per ton average cost of coal delivered to plants (including transportation) from January through September of this year.
EIA expects stockpiles to remain high, staying well over 100 million tons throughout 2025.
Power producers just aren’t burning coal as often.
This year, utility-scale wind and solar will produce more power — 665.8 million megawatt-hours (MWh) — than coal for the first time, according to the EIA’s November Short-Term Energy Outlook.
Gas-fired generation, which became the dominant fuel in 2016 and now delivers more than 40% of the country’s power, continues to push coal out of competitive power markets.
High power demand during winter and summer extremes have historically been key seasons for coal, but utilities and power producers are now getting more of that electricity from renewables and gas.
U.S. coal plants now collectively burn just 1 million tons a day, half as much as in 2015, based on the 12-month average through September. At that rate, it would take power producers more than 4 months to use up all the coal sitting around, IEEFA reported.
When coal stockpiles previously soared, like in 2009, 2012, 2016, and again in 2020, plant owners worked hard to reduce them to a 50- to 60-day supply, but it took them anywhere from 16 months to almost three years to do it, IEEFA said. But rarely has so much coal lingered for so long as it has currently.
The analysis said power companies will need to buy a lot less coal to bring their stockpiles down, even if they keep burning it at the same rate. EIA forecasts coal production output to fall to just 469 million tons in 2025, down from 505 million tons in 2024 and 578 million tons in 2023.
Meanwhile, coal continues to fade from the U.S. generation mix. In 2025, IEEFA estimates that another 13 gigawatts (GW) of the remaining 173 GW of coal-fired capacity will either retire or be converted to gas, further reducing the market for coal.
