EIA: Power Price Surge Lifts Coal, Gas Plant Profitability

SECAUCUS, NJ (DTN) – Both natural gas and coal-fired power plants in the U.S. have seen significant increases in operational profitability over the last two years, driven by elevated average daily wholesale electricity prices, the Energy Information Administration (EIA) said in a report Monday (12/8).

The agency said it arrived at the conclusion after analyzing the spark spread for natural gas generators and the dark spread in coal in pricing data pulled from PJM Interconnection, the nation’s largest wholesale electricity market.

Those spreads began increasing in 2023 and continued doing between January and November this year, the EIA said.

Specifically for the natural gas market, the improved spark spread provides a strong incentive for gas-fired units to run more often, creating powerful structural demand for Henry Hub futures and regional PJM gas contracts, which in turn establishes a firmer price floor for the commodity, according to the report.

In coal, the rising dark spread supports the domestic thermal coal sector by ensuring continued operational competitiveness for coal plants. That stabilizes demand for Appalachian and Illinois Basin coal supplies and aids in maintaining expectations for physical coal contract pricing, the EIA stated.

Widening gaps between fuel cost and electricity revenue directly impacts the underlying demand dynamics for energy commodities.

The spark spread for natural gas increased from a January-through-November average of $21/MWh in 2023 to $28/MWh in 2025.

The dark spread in coal soared nearly three times between January and November this year to average $21/MWh, even as the cost of coal increased by 5%, according to the EIA report.

With that, the EIA noted the operational economics of coal plants had improved significantly relative to gas-fired plants.