EIA predicts coal generation, production increase in near term

The U.S. Energy Information Association (EIA) recently reported that coal production and coal-fired electricity production are expected to rise in 2017 and 2018, as natural gas prices will likely increase.

The amount of the increase in coal production is expected to vary across regions. EIA predicts that the Western regions will see the biggest increase from 407 million short tons (MMst) in 2016 to 443 MMst in 2018.

Coal production in the Interior regions will likely increase modestly from 150 MMst in 2016 to 152 MMst in 2018. The Appalachian region is forecast to produce less coal, 177 MMst in 2018 compared to 183 in 2016.

Coal production in the United States totaled 739 MMst in 2016, an 18 percent drop from 2015 and the lowest level since 1978.

Since the vast majority of the coal that is produced is used for electricity generation, coal production and coal-fired electricity generation are very closely related. In 2016, 92 percent of coal consumption came from the electric power industry.

Coal’s share of the electricity generation mix decreased from 2008 to 2016, and in 2016, natural gas-fired electricity generation on an annual basis surpassed coal-fired generation for the first time.

Because of an expected rise in the price of natural gas, the use of natural gas-fired generators is expected to decrease slightly in 2017, allowing coal to regain a larger share of the generation mix.

New natural gas power plants are being constructed, which may lead to an increase in natural gas use for electricity generation. Possible changes in the use of renewable energy sources, as well as changes in demand, will also affect the generation mix.