Pentagon Coal Power Order Signals Major Shift in U.S. Energy Policy

Federal purchasing power used to slow coal plant closures and prioritise grid reliability

In February 2026, the U.S. administration ordered the Department of Defense to purchase electricity generated from coal-fired power plants, one of the most direct federal interventions in power markets in recent years.[1] The move is designed to extend the operating life of ageing coal facilities scheduled for retirement, as coal’s share of U.S. electricity generation hovers at around 16–17% in 2024–2025, down from about 50% in 2005.[7] Total U.S. power consumption is expected to reach about 4,190 billion kWh in 2025, driven partly by electrification and rapidly expanding data-centre demand.[6] These pressures have intensified concerns over grid reliability during extreme weather events.[3]

Federal Demand as an Energy Market Tool

The Pentagon is the single largest institutional consumer of energy in the United States, using roughly 0.6 quadrillion British thermal units annually.[2] Long-term power purchase agreements linked to that demand can provide a stable revenue stream for generators that might otherwise retire.[5] More than 120 GW of U.S. coal capacity has been retired since 2010, leaving a smaller but regionally important fleet.[12] Targeted federal support is intended to preserve dispatchable capacity where replacement generation and transmission infrastructure are not yet fully in place.[3]

Reliability and National Security Arguments

The policy has been framed in national security terms, with coal-fired generation described as “fuel-secure” power because plants typically store several months of fuel on site.[2][4] This is seen as particularly relevant for military installations, which require continuous electricity for command-and-control systems, intelligence infrastructure, cyber operations and defence supply chains. Disruptions to grid power are therefore treated as operational risks rather than purely economic concerns.[3] Supporters also argue that a diversified generation mix reduces exposure to single points of failure as electricity demand rises and weather-related grid stress becomes more frequent.[11] U.S. utility-scale battery storage capacity surpassed 26 GW in 2024 but still represents only around 2% of total generating capacity.[8] Reliability is thus increasingly delivered through a combination of storage, flexible generation and grid expansion rather than a single baseload fuel.[11]

Economic and Market Implications

Coal remains less competitive than newer sources of power. Wind and solar together produced 17% of U.S. electricity in 2024, overtaking coal, while natural gas supplies around 40–42% of generation.[7][10] Ageing coal plants face rising operating and maintenance costs because of lower utilisation rates and environmental compliance upgrades, making them unprofitable in competitive wholesale markets without long-term contracts.[5] Critics argue these contracts shift higher costs onto taxpayers or electricity consumers, and point to coal’s higher carbon intensity and local air-pollution impacts, which impose additional economic costs through emissions regulation, public health effects and future climate-transition risks.[13] However, the policy could provide short-term economic support for coal-producing regions where plant closures are tied to local employment and tax revenues.[4]

Outlook for the U.S. Power Mix

Electricity demand is entering a sustained growth phase. Computing already accounts for about 8% of U.S. commercial-sector electricity use, and data-centre consumption is expected to rise sharply.[9] Forecasts suggest data centres could consume 6–12% of total U.S. electricity before 2030, underlining the focus on firm capacity and grid resilience.[11] While the Pentagon’s intervention may extend the life of specific coal plants and secure supply for federal facilities, it does not change the broader direction of the power sector, where renewables are expanding and coal’s long-term share is expected to decline slightly after 2025.[6] Instead, the policy signals a phase in which government procurement is being used to influence energy markets as demand rises and extreme weather becomes more frequent.[3]

Bibliography

[1] R. Meredith, “Trump orders Pentagon to buy power from coal plants,” CNBC, Feb. 11, 2026. Available: https://www.cnbc.com/2026/02/11/trump-orders-pentagon-to-buy-power-from-coal-plants.html (accessed Feb. 18, 2026).

[2] The White House, “Fact sheet: President Donald J. Trump strengthens United States national defense with America’s beautiful clean coal power generation fleet,” Feb. 11, 2026. Available: https://www.whitehouse.gov/fact-sheets/2026/02/fact-sheet-president-donald-j-trump-strengthens-united-states-national-defense-with-americas-beautiful-clean-coal-power-generation-fleet/ (accessed Feb. 18, 2026).

[3] V. Volcovici and T. Hunnicutt, “Trump directs Energy Department to issue funds to keep coal plants online,” Reuters, Feb. 11, 2026. Available: https://www.reuters.com/business/energy/trump-directs-energy-department-issue-funds-keep-coal-plants-online-2026-02-11/ (accessed Feb. 18, 2026).

[4] J. Power, “Trump orders Pentagon to buy electricity generated by coal,” Al Jazeera, Feb. 12, 2026. Available: https://www.aljazeera.com/economy/2026/2/12/trump-orders-pentagon-to-buy-electricity-generated-by-coal (accessed Feb. 18, 2026).

[5] H. Smith, “Get more electricity from coal, Trump tells Department of Defense,” Los Angeles Times, Feb. 11, 2026. Available: https://www.latimes.com/environment/story/2026-02-11/get-your-electricity-from-coal-trump-tells-department-of-defense (accessed Feb. 18, 2026).

[6] M. Muir, “Donald Trump orders US defence department to buy coal-generated electricity,” Financial Times, Feb. 11, 2026. Available: https://www.ft.com/content/af62f1fd-c409-4f33-8cd5-329146eb4222 (accessed Feb. 18, 2026).

[7] U.S. Energy Information Administration, Short-Term Energy Outlook, Washington, DC, USA, Jan. 2025. Available: https://www.eia.gov/outlooks/steo/ (accessed Feb. 18, 2026).

[8] U.S. Energy Information Administration, “U.S. electricity generation by energy source,” EIA Electricity Data Browser, 2025. Available: https://www.eia.gov/electricity/data/browser/ (accessed Feb. 18, 2026).

[9] U.S. Energy Information Administration, “U.S. battery capacity increased 66% in 2024,” Today in Energy, Mar. 12, 2025. Available: https://www.eia.gov/todayinenergy/detail.php?id=64705 (accessed Feb. 18, 2026).

[10] U.S. Energy Information Administration, “Electricity use for commercial computing could surpass space cooling, ventilation,” Today in Energy, Jun. 25, 2025. Available: https://www.eia.gov/todayinenergy/detail.php?id=65564 (accessed Feb. 18, 2026).

[11] U.S. Department of Energy, “DOE releases new report evaluating increase in electricity demand from data centers,” Washington, DC, USA, Dec. 20, 2024. Available: https://www.energy.gov/articles/doe-releases-new-report-evaluating-increase-electricity-demand-data-centers (accessed Feb. 18, 2026).

[12] A. Shehabi et al., 2024 United States Data Center Energy Usage Report, Lawrence Berkeley National Laboratory, Berkeley, CA, USA, 2024. Available: https://eta-publications.lbl.gov/sites/default/files/2024-12/lbnl-2024-united-states-data-center-energy-usage-report.pdf (accessed Feb. 18, 2026).

[13] International Energy Agency, Electricity 2025: Analysis and Forecast to 2027, Paris, France, 2025. Available: https://iea.blob.core.windows.net/assets/7c671ef6-2947-4e87-beea-af0e1288e1d7/Electricity2025.pdf (accessed Feb. 18, 2026).