Coal vs. Gas: Profitability Shifts in PJM’s Power Market
- Tony Zelinski
- 10 hours ago
- 2 min read
In recent years, the profitability landscape for U.S. power generation has been shifting in surprising ways. The spark spread (a measure of natural gas-fired generator margins) and the dark spread (the equivalent for coal-fired plants) are both climbing, but coal has been catching up faster than gas.
Between January and November 2025, wholesale electricity prices in the PJM Interconnection—the largest U.S. power market—rose significantly compared with the same period in 2024. That price lift translated into stronger margins for both coal and gas plants.
🔥 Coal’s comeback: In 2023, coal generators were underwater, with an average dark spread of –$14/MWh. By 2025, that figure had surged to +$21/MWh, a nearly 250% increase despite coal fuel costs rising about 5%.
🌬️ Gas still strong: Natural gas spark spreads rose from $21/MWh in 2023 to $28/MWh in 2025, showing continued competitiveness.
📉 Narrowing gap: Coal’s faster improvement means the margin difference between coal and gas has narrowed since 2023, signaling improved economics for coal plants relative to gas.
Why This Matters
For years, natural gas has dominated new generation economics, while coal plants struggled under higher costs and environmental pressures. This recent narrowing of spreads suggests coal is regaining short-term competitiveness in certain markets.
But the story isn’t just about fuel costs—it’s about market dynamics.
Higher wholesale electricity prices, driven by demand and system conditions, are reshaping the profitability equation.
For policymakers, utilities, and investors, this raises important questions:
Will coal plants extend their operational lifespans despite climate commitments?
How will gas plants maintain their edge as spreads tighten?
What role will renewables play as volatility in fossil fuel economics continues?
Final Takeaway
The spark and dark spreads are more than technical metrics—they’re signals of shifting market realities. As coal narrows the gap with gas, the PJM market reminds us that energy economics are fluid, and profitability can swing quickly with price and fuel dynamics.
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