Coal-Fired Generator Retirements are Undermining Energy Security and There Is Not Enough Load Growth to Compensate

AI and data centers have captured the public’s attention over the last couple of years and every big tech company is now into the game. There will be failures and retrenchment, of course, as there always are with any new boom. But, there can no doubt that neither AI nor data centers are going away. The economy is increasingly built on them. There’s a lot to worry about with AI, for sure. No one should underestimate the potential problems, but it’s happening, and it will demand huge amounts of energy that cannot be supplied by solar or wind.

Natural gas and nuclear are obvious answers, but it is also clear they aren’t enough by themselves, and some other reliable source of energy is needed, although the politically correct are rue to admit it. That energy resource is coal, and I was not surprised to see this headline at the top of the heap at Real Clear Energy today:

For AI, We Need More Coal - Clemente & Palmer, Coal Zoom

Coal Zoom, as one might expect, is a pro-coal site, but the authors are legitimate experts on the subject and I found their post (the first of a two-part article) compelling:

Companies planning the new wave of Data Centers are about to be hit with a hard dose of electricity reality -- they cannot proceed at scale without more coal-based generation. President Trump was correct in issuing an Executive Order directing his Cabinet to identify coal-powered infrastructure that could support AI data centers and meet the energy needs of technology firms.

More and larger data centers will place unprecedented demand on the US power system. The Berkeley National Laboratory found that America’s data centers consumed a little more than 4% of total U.S. electricity in 2023, but by 2028 they could consume 12% - and only the beginning of AI demand that is expected to grow for decades.

With the rise of such data centers, in conjunction with electric vehicles, heat pumps, electrolyzers, air conditioners, cryptocurrency, etcetera and etcetera, the Energy Information Administration (EIA) projects power generation to increase from about 4,175 Terawatt Hours (TWh) in 2025 to over 5,600 TWh in 2044.

This rise of over 1,400 TWh in the next 20 years is more than six times the growth in power generation over the 20-year period 2004 to 2023. To give a further idea of scale, this increase alone exceeds the current electricity generation of Germany, France and the UK combined.

Where will the US get the energy required to meet this dramatic increase in electricity demand over the next two decades? The US has already dug itself into a hole by cavalierly closing over 300 coal power plants since 2010 and reducing coal’s generation from a national 45% to 16%. The underlying reasons for this closure of plants have been aggressive and well-funded political activism, overzealous policy makers and ill-conceived Renewable Portfolio Standards.

As a result, the US is steadily developing an electric power system that will be increasingly expensive, less reliable and a risk to national security. Warnings from the National Electric Reliability Council (NERC), decrying the continuing closure of still productive coal power plants, have gone unheeded. Just last December NERC stated:

“Additional coal-fired generator retirements… have caused a sharp decline in anticipated resources beginning next summer (2025) … new generation is insufficient to make up for generator retirements and load growth”

This concern has been echoed by Chris Wright, US Secretary of Energy: "If we want to grow America's electricity production meaningfully… we have to stop closing coal plants”

Data centers are the backbone of the digital world, powering everything from social media to cloud computing. AI will bring substantial socioeconomic benefits to regions, states and countries that have reliable and affordable electricity to support its operation.

The US has a substantial lead in data center development, but China and India are building out their coal generation and this baseload power will do much to attract data centers at the international level. China’s aggressive stance on capturing AI opportunities is well documented, and the Government of India is taking steps to make that nation’s rapidly expanding data center market a global hub.

Unless the US is willing to cede a large part of the future AI field to other countries, policies which assure reliable and affordable electricity need to be at the forefront of America’s energy planning. But no sooner had President Trump’s several initiatives on coal been publicized than the knee-jerk reactions from the usual suspects appeared before the ink dried on the Executive Orders.

The Washington Post said: “Trump gave the dying coal industry a lifeline. ABC News: “Trump wants ‘clean coal’ but there’s no such thing”. Reuters: “Trump Administration plans to give dirty US coal plants a reprieve”. And the ever reliable Sierra Club: “We want to close all US coal plants”

That the battle lines were drawn before the critics even had a chance to examine what the President was proposing shows their goals are more concerned about thwarting Trump and stopping coal than they are about bringing reliable and affordable electricity to the American people.

Pretty well said, don’t you think?

#Coal #CoalZoom #Electricity #AI #DataCenters #Retirements #LoadGrowth