The structure of the United States electricity market is both fragmented and highly differentiated, creating materially distinct investment environments across regions. Of the ten transmission systems nationwide, roughly two-thirds of total electricity demand is served by competitive wholesale markets operated by Independent System Operators (“ISOs”) and Regional Transmission Organizations (“RTOs”). Among these, the Electric Reliability Council of Texas (“ERCOT”) stands out as a uniquely self-contained system, operating largely outside federal jurisdiction and managing approximately 90 percent of Texas’s electricity load.  

At the centre of this convergence is a structural imbalance. Coal-fired generation, once a cornerstone of US baseload capacity, has been in sustained decline for over a decade, displaced by cheaper natural gas and tightening environmental standards. This trend is not uniform across the country, as a senior government affairs executive at one of the largest RTOs in the US observed, “Several ‘clean energy’ states have already eliminated coal or enacted firm phase-out timelines.” In contrast, “in West Virginia in particular, support for coal is structural and political rather than economic, reflecting coal mining’s central role in employment and state identity,” added the executive.  

“Several ‘clean energy’ states have already eliminated coal or enacted firm phase-out timelines.”

A senior government affairs executive at one of the largest RTOs in the US

In Texas, however, the dynamic is shaped less by identity and more by system reliability. Demand is rising rapidly, driven in part by the expansion of data centres and AI infrastructure, which require continuous, high-density power supply. At the same time, dispatchable capacity is tightening as coal plants retire. The North American Electric Reliability Corporation (“NERC”) has warned that this combination — load growth, weather volatility and the loss of firm generation — poses increasing risks to grid stability. A senior advisor on energy in the US commented, “The way I see it right now, there are two things that are going on with coal, in addition to the sort of structural decline question: Trump’s policies and current capacity without coal is enough to match the demand expected in the upcoming years from the data centres boom.” So, while coal contributes to reliability, it may not be strictly necessary to meet projected demand under current assumptions. 

This ambiguity is reflected in recent generation trends. Coal output in ERCOT has increased in the short-term, largely due to higher natural gas prices, but this rebound is cyclical rather than structural. Meanwhile, renewable generation continues to scale rapidly, with solar now accounting for over 13 percent of total generation in the region. 

Under Trump, recent executive actions have sought to support coal by rolling back regulatory constraints and promoting its role in powering energy-intensive sectors, “obviously designed to help coal,” stated an energy expert. More significantly, “the most consequential federal policy affecting coal generation is the use of the Department of Energy’s emergency authority under Section 202(c) of the Federal Power Act to prevent coal plant retirements on reliability grounds,” added the senior government affairs executive. While this mechanism provides a potential lifeline for certain assets, it is inherently temporary and legally uncertain, raising questions about its viability as a long-term policy tool. 

“The most consequential federal policy affecting coal generation is the use of the Department of Energy’s emergency authority ... to prevent coal plant retirements on reliability grounds.”

A senior government affairs executive at one of the largest RTOs in the US

From a private sector perspective, the risk profile of coal remains elevated. Operational challenges, environmental liabilities and reputational pressures continue to weigh on asset valuations. A senior executive at one of the largest competitive electricity providers in the country candidly noted, “We have a huge risk around our coal assets and coal ash ponds, etc.” At the same time, public sentiment is becoming an increasingly relevant factor. Rising electricity prices are already triggering backlash, with one source highlighting “negative public reaction” but also suggesting that it is a “failure on the part of the public to understand grid economics.” This disconnect has the potential to influence policy in unpredictable ways, particularly at the state level. 

For multinational investors, there is a tangible, albeit narrow, opportunity emerging in parts of the US electricity market — particularly in regions like ERCOT, where demand growth is strong and market structures reward dispatchable capacity. However, this opportunity is neither universal nor durable. It is geographically concentrated, shaped by local regulatory frameworks and inherently transitional in nature. 

Coal, in this context, should not be viewed as a long-term growth asset but as a residual component of a system under strain during transformation. Its value lies in its ability to provide short-term reliability in specific market conditions, rather than in any sustained structural resurgence. The strategic challenge is to navigate this complexity with precision: identifying where legacy assets can still generate returns, while maintaining alignment with the broader trajectory toward a more diversified and lower-carbon energy system.