US power plants are currently holding a substantial surplus of coal — 138 million tons valued at approximately $6.5 billion — a development that could reduce future demand for coal from Wyoming’s Powder River Basin, one of the country’s largest coal-producing regions, Kiowa County Press reports.
The new analysis, published by the Institute for Energy Economics and Financial Analysis (IEEFA), highlights growing stockpiles at power plants as a key challenge for coal producers. Seth Feaster, an energy data analyst with IEEFA and one of the report’s authors, said that although coal deliveries to power plants have already been declining, it may not be enough to offset the current oversupply.
“That’s going to squeeze coal producers for the next year or more,” Feaster said. “Power companies are going to have to burn down that inventory and try and reduce what their deliveries are going to be.”
The report suggests that it could take up to three years for power plants to work through the current coal stockpiles, further reducing the demand for fresh shipments from Powder River Basin mines and other production hubs.
Several factors have contributed to the growing coal stockpiles at power plants. One of the key drivers is the falling price of natural gas, which has prompted utilities to shift away from coal in favor of cheaper gas-fired electricity generation.
Natural gas-fired plants are also seen as a better fit for the evolving power grid, which is increasingly reliant on renewable energy sources like wind and solar. Gas-fired plants are more flexible and can quickly adjust output to balance the fluctuating production from renewables.
“The ability of gas-fired power to adjust quickly to the ups and downs of solar and wind production has made it an integral part of the modern energy mix for power production,” Feaster said.
The appeal of renewables extends beyond flexibility. Wind and solar energy are seen as long-term cost-effective options for power companies since, once the infrastructure is built, there are no ongoing fuel costs.
The gradual shift in energy production away from coal has been evident for years. Coal deliveries to power plants have steadily declined from about 80 million tons per month in 2008 to around 30 million tons per month in 2024, according to IEEFA data.
The Powder River Basin, which spans parts of Wyoming and Montana, is one of the largest coal-producing regions in the United States. Mines in the region supply coal to power plants across the country. However, the growing stockpiles at those plants could force producers in the region to reduce output or find alternative buyers.
As utilities seek to reduce their coal inventories, they are expected to decrease the number of shipments they order from Powder River Basin producers. This is especially concerning given that previous inventory surpluses have taken years to resolve. If this pattern holds, the Basin’s coal producers may be facing several challenging years ahead.
Coal companies have already been dealing with a long-term decline in demand as natural gas and renewables capture a larger share of the energy market. Efforts to support coal at the federal level, such as during the Trump administration, have had limited impact on reversing these broader market trends.
“It’s pretty clear that anything that’s going to help gas in the overall energy mix is likely to help gas much more than coal,” Feaster said. “It’s going to keep prices on the fuel cheaper.”
