The US coal industry is grappling with the potential impact of planned data centers on domestic power demand, which could be mixed or limited. With over 5,000 data centers currently in the US, demand for data centers is projected to grow by 9 percentage points annually through 2030.
Approximately 8-10 larger data centers could be developed across the US in coming years. The US Energy Information Administration (EIA) projected commercial electricity sales would rise by 3 percentage points this year and 1 percentage point in 2025, helping to boost overall electricity generation.
So far this year, US coal-fired generation has fallen as lower-cost natural gas, nuclear, and renewable generation maintained or expanded their leads over coal in the generation mix. EIA expects coal-fired generation to fall in 2024 and edge higher in 2025.
Factors that need to be considered before more certain projections of data centers' impact on the US coal industry are released include state environmental goals, federal regulations, availability of overall energy infrastructure, different generation types, and the approach that the IT sector will pursue when planning new projects.
Some IT companies are favoring lower-CO2 emitting generation, such as Microsoft, Amazon, and Alphabet, and others are considering buying generation from wholesale electricity markets. US utilities continue to retire coal units to comply with US Environmental Protection Agency (EPA) rules, and the amount of coal-fired generating capacity available in the US is expected to shrink to 163.7 GW by the end of 2025 from 177 GW in 2023.
However, some in the electric power industry are concerned about enough generating capacity being available to meet expected load growth, as new generating facilities may need to be built to provide the necessary power.
US coal producers are paying close attention to plans for data centers and possible effects on coal demand but are still scaling back output. US coal mines' output totaled 591.5 million metric tonnes this year through 12 October, down by nearly 13 percentage points from the same period in 2023.
Many states with the greatest growth in commercial electricity demand still have relatively large amounts of coal-fired generation, but many of these states are also natural gas generation hubs. The fate and plans of data center projects in the pipeline, along with economics, regulation, and company preference, will determine the outcome for coal generation.
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