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The coal use by power producers in the United States has experienced a significant decrease this year, with coal failing to achieve a 20% market share in any month, media reported, citing the U.S. Energy Information Administration (EIA).
This is in stark contrast to years before 2020, where coal consistently held a market share of over 20%. The decline in coal usage could be attributed to lower prices for gas and increased utility-scale generation from solar.
The EIA predicted further deterioration in coal power, with its market share expected to drop to record lows of 10-13% in 2024.
Electricity generation from coal plants has consistently fallen throughout 2023, both in utilities and independent power producers (IPPs), indicating a substantial decline in the economics of coal-fired power.
Meanwhile, coal stockpiles have surged, reaching nearly 130 million tonnes in June, which is enough for 113 days of usage based on the average amount of coal consumption in 2022. As this excess inventory will take time to deplete, it would affect future coal demand and production in the U.S.
To reduce stockpiles, coal-fired power plants are expected to purchase less coal, leading to a projected downturn in coal production for the remainder of 2023 and throughout 2024.
The EIA projected the coal output to fall 25% or 115 million tonnes from 2023 levels to 466 million tonnes in 2024.
The anticipated production decline will particularly impact Western producers and Appalachian production. The Powder River Basin, where boasts the nation's largest mines, is expected to see a 30% drop to 246 million tonnes in coal output for 2024, while Appalachian production is expected to slide by almost 22% to 132 million tonnes.
Following a sharp drop in coal demand in 2020 due to the COVID-19, U.S. coal producers experienced a moderate rebound and stabilization of output in 2021. However, the surge in coal prices in 2022 triggered by the Russia-Ukraine conflict only marginally improved coal production, and the output declined again this year.
U.S. coal companies are now facing a dramatic downturn caused by an accelerating decline in domestic demand.
(Writing by Riley Liang Editing by Emma Yang)
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