The American coal industry, once the backbone of the nation’s electricity grid, is facing a reckoning in 2025. According to the latest data from the Energy Information Administration (EIA), the planned retirement of coal-fired power plants is set to double this year, marking one of the steepest declines in decades. An estimated 8.1 gigawatts (GW) of coal capacity is slated for closure, a sharp increase from 2024’s 4 GW retirement figure and a return to the more aggressive phaseouts seen over the past ten years.

Coal’s share of the U.S. power generation mix has already dwindled to 16%, a far cry from its dominance just two decades ago. The culprits? Cheaper natural gas, aggressive renewable expansion, and climate-policy shifts led by the Biden administration’s push for a cleaner grid. Yes, Trump-era policies are a temporary reprieve, but the long-term trajectory is clear: US coal is at least eyeing the exit, although the US still relies heavily on coal for its power.

For now.

But it’s not just regulation that’s driving coal to the exit. Market forces are proving just as lethal. Utilities are opting for natural gas and renewables over coal, both for cost and emissions reasons. Even without stringent federal mandates, power producers are finding it increasingly difficult to justify the expense of maintaining aging coal plants.

By the Numbers

The EIA’s breakdown of 2025 retirements is stark:

• 12.3 GW of total power capacity set to retire (a 65% increase from 2024)
• 66% of those retirements will come from coal
• 21% will come from natural gas, mostly less-efficient single-cycle plants

What’s Filling the Gap?

With fossil fuel retirements accelerating, where is the replacement power coming from? According to the EIA, 63 GW of new utility-scale generation is expected to come online in 2025. The largest contributors:

• Solar (leading the charge)
• Battery storage
• Wind power
• Some additional natural gas capacity

This marks a nearly 30% increase in new capacity from 2024, making last year the biggest year for power generation expansion since 2002.

The Catch

But a wildcard is threatening the clean energy surge–America’s data center boom. The U.S., home to one-third of the world’s data centers, is seeing an unprecedented strain on the grid that has already led to delays in coal and gas plant retirements.

While renewables are making rapid gains, concerns over grid stability and energy storage capabilities remain. Can a solar-and-battery-heavy grid handle peak demand? Or will the U.S. be forced to keep some fossil-fuel assets in reserve longer than expected?

The numbers don’t lie—coal is being phased out at a historic pace, and 2025 will mark a significant step toward its eventual demise in the U.S. power sector. But the transition isn’t without its challenges. The rise of data centers and a growing need for grid reliability means that utilities will need to balance aggressive clean energy targets with the practical realities of keeping the lights on.

While it’s unlikely that clean energy will usher in coal’s final act anytime soon, the industry’s role is shrinking.

By Julianne Geiger for Oilprice.com

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