The US Energy Information Administration (EIA) raised its outlook for coal consumption at US power plants in 2021 as higher natural gas prices are expected to result in fuel switching.
EIA expects the US electric power sector to consume 546mn short tons (495mn metric tonnes) of coal in 2021, up from an expected 443mn st this year, according to the agency's latest Short-Term Energy Outlook.
The agency raised its 2020 and 2021 coal-burn forecasts by 10mn st and 24mn st, respectively, compared with last month's report.
The agency now expects coal power this year to be 780bn kWh. That is 2.3pc greater than EIA projected last month but still down from actual coal generation of 959bn kWh in 2019.
In 2021, coal generation will rise to 963bn kWh, the agency projected today. EIA's forecast last month for 2021 was 917bn kWh.
Coal's share of total generation in the US is expected to climb to 25pc in 2021 from 20pc this year.
Natural gas generation in 2020 is expected to climb to 1,500bn kWh, up from 1,477bn kWh in 2019. EIA expects power plants to cut natural gas generation by 15pc next year to 1,274bn kWh.
Natural gas's share of generation is expected to fall to 33pc in 2021 from 39pc this year.
Renewable generation will total 763bn kWh in 2020 and account for 20pc of the US' generation fuel mix. It will then rise to 840bn kWh, or 22pc of the market, in 2021, still lagging coal. EIA previously projected renewable power would total 755 bn kWh in 2020 and 845bn kWh next year.
EIA expects overall power demand to climb by less than 1pc in 2021 to 3,876bn kWh.
Increased heating demand in early 2021 is expected to be offset by forecasts calling for fewer cooling degree days during the third quarter of next year, EIA said.
Generators will switch away from natural gas in 2021 as prices are expected to average $3.14/mmBtu for the year, up from an average of $2.14/mmBtu this year, EIA said.
To meet the increased power demand, coal production in 2021 is expected to climb to 627mn st, up from an expected 521mn st this year. EIA this month lowered its 2020 coal production forecast by 4mn st and raised its outlook for 2021 by 2mn st.
EIA's latest 2020 production forecast is 26pc lower than last year's coal output.
EIA lowered its outlook for coal exports this month. The agency expects thermal and metallurgical coal exports to total 63.6mn st this year, a 3pc drop from October's projection of 65.4mn st. Exports are expected to climb to 64.7mn st next year, down by 8.5pc from last month's forecast.
