Montana is a net supplier of energy to the rest of the country, producing energy from both fossil and renewable resources. About one-fourth of the nation’s demonstrated coal reserve base is in Montana, and the northern and eastern areas of the state are believed to contain large deposits of crude oil and natural gas.

Montana holds one-fourth of the nation’s demonstrated coal reserve base and substantial renewable resources.

The Missouri River is the longest river in the United States and the fourth longest in the world. Beginning in the Rocky Mountains in western Montana and flowing eastward across the state, the Missouri River and its tributaries give Montana substantial hydroelectric energy resources. The state’s western mountains capture warm, moist air from the Pacific Ocean, creating a more moderate climate in the western third of Montana than further east, where the Rocky Mountains give way to dry, wind-swept plains that stretch to the Dakotas. The state’s vast plains provide Montana with some of the best wind potential in the nation.

Montana is the fourth largest state in the nation and the third least densely populated. Much of the eastern third of the state has, on average, less than one resident per square mile. Montana’s population is clustered in and around a few towns, mainly in the valleys of the Missouri River and its tributaries.

Montana’s early economy was built around mining, ranching, wheat farming, and timber. After World War II, spurred by such popular destinations as Glacier and Yellowstone National Parks, tourism increased. In 1970, tourism surpassed mining, becoming the second largest industry in the state after agriculture. In 2014, the service sector—including real estate, health care, the hospitality industry, and government—was the largest contributor to the state’s gross domestic product (GDP), but natural resources and mining continue to be significant contributors.

The mining; crude oil and natural gas production; petroleum refining; and agricultural industries are all energy-intensive. Those industries, as well as long travel distances within the state, place Montana’s per capita energy consumption among the top one-third of all states. The transportation and industrial sectors lead state end-use energy consumption, together accounting for three-fifths of the state’s total. Summer days can exceed 100 degrees Fahrenheit on the plains and winter can bring Arctic blasts with subzero temperatures. Despite the temperature extremes, Montana’s small population results in a residential sector that uses far less energy than other end-use sectors in the state.

Renewable Energy

Quick Facts

  • The Bakken and Three Forks formations in the Williston Basin of Montana and North Dakota are currently estimated to be capable of producing 7.4 billion barrels of oil.
  • As of the end of 2015, Montana held nearly one-fourth of the nation’s demonstrated coal reserve base and was the sixth-largest coal-producing state. It produced 4.7% of U.S. coal in 2015 and distributed coal to seven other states.
  • Montana’s four refineries, with more than 31% of U.S. Petroleum Administration for Defense District 4 (Colorado, Idaho, Montana, Utah, and Wyoming) refining capacity as of January 1, 2016, process domestic and Canadian crude oils for regional markets.
  • Hydroelectric power provided almost one-third of Montana’s net electricity generation in 2015 and wind energy provided most of the rest of the state’s renewable generation.
  • Montana has the second largest amount of land in farms, and the industrial sector, which includes agriculture, is the largest energy-consuming sector in the state.

Montana has substantial renewable energy resources. Its mountainous terrain along the Continental Divide creates fast-running rivers, and the eastern two-thirds of the state is drained by the Missouri River and its tributaries. In 2015, Montana was the seventh-largest producer of hydroelectric power in the nation, having fallen from the fifth-largest because of drought conditions, particularly in western Montana, in the second half of 2015. The state has 23 hydroelectric dams. Six of Montana’s 10 largest power plants by generating capacity are hydroelectric facilities. Opportunities for hydroelectric generating capacity expansions around the state are being evaluated.

Montana’s plains have some of the best utility-scale wind energy potential in the nation.

With its high plains crossed by occasional mountains and wide river valleys, eastern Montana has some of the best utility-scale wind potential in the nation. The first utility-scale wind farm in the state came online in 2005. By 2016, Montana had 655 megawatts of wind-powered electricity generating capacity in operation from utility-scale wind farms located in the center of the state. More wind projects are in various stages of development. However, new wind projects depend in part on demand for renewable energy from other states and on available transmission capacity. To provide a stable supply of electricity to the grid and offset the variability of wind-power, a large transmission and closed loop pumped hydro storage project is in development about 100 miles northwest of Billings, Montana.

In some areas, Montana has significant geothermal energy resources. Among more than 50 geothermal areas that the state has identified, about one-third are high-temperature sites. Montana’s most significant geothermal resources are in the mountainous southwest, but, so far, they have not been tapped for electricity generation. Low- and moderate-temperature resources are found in nearly all areas of the state. Those geothermal resources have a variety of direct-use applications in Montana, including recreational hot springs, greenhouses, and fish farms. Several hot springs resorts and public bathing facilities in Montana take advantage of their geothermal resources by using them for space heating, as well as for mineral baths.

Although almost one-tenth of Montana’s residents heat their homes with wood, very little electricity generation in the state is from biomass. Most of Montana’s biomass comes from and is used at wood-processing facilities. Montana is considering increasing the use of biomass from wood waste, particularly from trees culled as part of efforts to fight pine beetle infestations.

Montana had 4.5 megawatts of installed solar generating capacity by the end of 2015, but none of it was at electric utility-scale solar facilities. There are a variety of residential and commercial distributed (customer-sited, small-scale) solar generation installations around the state.

Montana’s renewable resource standard (RRS) requires retail electricity suppliers to get at least 15% of the electricity they sell in-state from renewable energy sources beginning in 2015. Power must come from renewable facilities that began operation after January 1, 2005. The RRS recognizes renewable energy from wind, solar, geothermal, biomass, small hydroelectric facilities, landfill gas, anaerobic digesters, and fuel cells that use renewable fuels as qualifying renewable resources. The standard requires electricity suppliers to buy a set amount of power from smaller community-based renewable energy projects.


More than half of Montana’s net electricity generation comes from coal, but new federal environmental rules are affecting coal-fired generation. In 2015, one of Montana’s older coal-fired power plants was shut down. The owner cited the projected costs of new pollution controls needed to meet federal restrictions on emissions of mercury and other toxins produced by burning coal. Montana is hosting a test of carbon sequestration in a formation near the state’s Canadian border, which could help coal-fired power plants reduce the impact of carbon emissions. Five coal-fired power plants remain in operation in the state. Most of the rest of Montana’s electricity generation comes from hydroelectric power plants. Wind and natural gas-fired power plants provide additional electricity generating capacity, with wind providing the largest share of the additional generation.

Montanans use about half of the electricity generated in the state. The rest is sent to other western states by high-voltage transmission lines. Generating more electricity for sale in other states is seen as an economic opportunity for Montana, but current transmission lines are congested, and new capacity must be built to expand sales. Most of Montana is part of the Western Interconnection grid serving western states and Canadian provinces. Several transmission projects are being developed to increase capacity to move electricity from both conventional and renewable sources out of Montana to states in the west and southwest. Construction of a line between Montana and Alberta, Canada, was completed in 2013. It is the first direct interconnection between the two areas. A portion of eastern Montana is part of the eastern U.S. grid. One of the nation’s eight converter stations that connect the eastern and western grids is located at Miles City, Montana.

Montana deregulated its electricity system starting in 1997, but the state experienced rising retail electricity costs and later re-regulated some aspects. In 2015, the state’s average retail electricity prices were well below the national average, and the average price of electricity for all customers in Montana was less than in two-thirds of the states. About one-fifth of Montana households use electricity for heating. The commercial and residential sectors each consume a little more than one-third of the electricity used in Montana, and the industrial sector consumes the balance.

Natural Gas

Natural gas production in Montana is less than half of what it was at its peak in 2007. In 2015, the state produced less than 0.2% of the nation’s natural gas. Production from natural gas wells and coalbed methane wells in the state has trended downward in recent years as exploration activities have focused on drilling for oil rather than for natural gas. More than three-fourths of the producing natural gas wells in Montana are located in the northern part of the state, near the Canadian border. Production also comes from wells in smaller fields in the Williston Basin in northeastern Montana near the North Dakota border and from wells in south-central Montana.

Montana is crossed by natural gas pipelines from Canada and Wyoming. Almost all the natural gas entering the state comes from Canada, crossing the border at 10 import points. In 2015, about one-fourth of the nation’s net natural gas imports from Canada entered the country through Montana. Nearly all the natural gas that enters Montana-more than 95%-leaves the state, most of it continuing on to North Dakota on its way to Midwestern markets. Some of the natural gas entering Montana is put in storage. The state has more underground natural gas storage capacity than any other state in the Rocky Mountain region, and the Baker/Cedar Creek field in the Williston Basin in eastern Montana is the nation’s largest single underground natural gas storage facility.

More than half of Montana households use natural gas as their primary energy source for home heating. Overall, natural gas consumption is fairly evenly divided among the industrial, residential, and commercial sectors. Only a small amount of natural gas is used for electricity generation. Despite cold winters that can be especially harsh in eastern Montana, the state’s per capita natural gas use is below the national average. Although Montana is among the five states with the lowest total natural gas consumption, residents use more natural gas than the state produces, making Montana a net consumer.

Source: U.S. Energy Information Administration (Jan 2017)

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Montana suspended choice for the majority of customers in 2007. Customers above 5 megawatts (MW) can choose an alternative energy provider. Smaller customers on alternative supply before the ban on competition can continue to use alternative electricity supply. If a customer returns to the utility, they will lose their right to choose in the future.

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Most Montana customers have the opportunity to choose their natural gas provider. Customers choosing an alternate gas supplier have gas supply delivered by the local utility. If customers do not choose for an alternate gas supplier, the pay a supply charge which can vary as often as monthly.

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