Natural gas prices in the U.S. have hit a three-year high, prompting utilities to turn to cheaper coal for power generation this winter. Prices have surged from $4.23 to above $5 per MMBtu due to freezing temperatures and record-high LNG exports.

With natural gas prices soaring, utilities are set to increase coal-fired power generation. The EIA expects a 37% jump in the annual average price of natural gas for electric power plants in 2025 and a 21% increase for industrial customers compared to 2024.

Higher natural gas prices are driving increased coal production and demand. The EIA notes rising demand due to higher natural gas prices, delayed coal plant retirements, and strong heating demand. Electric power coal inventories are expected to end the year 17% lower than in 2024.

The surge in electricity demand, including AI-driven demand, could support a quiet comeback for coal in the coming years. Energy Secretary Chris Wright emphasizes the importance of maintaining existing firm capacity and avoiding blackouts.

Wood Mackenzie suggests that the boom in data center investment is helping to slow the decline of coal-fired power generation in the U.S. The expected drop in coal-fired power generation between 2025 and 2032 has been revised from 60% to about 39%.

Read more at Yahoo Finance: Surge in Natural Gas Prices Sets The Stage for Coal Comeback