How the AI data center boom is breathing new life into dirty, old coal plants

Switching to wind, solar, gas, nuclear, and more

Big Appalachian gas opportunity

Jordan Blum is the Energy editor at Fortune, overseeing coverage of a growing global energy sector for oil and gas, transition businesses, renewables, and critical minerals.

When the Homer City power plant—the largest coal-fired facility in Pennsylvania—shuttered in 2023, it marked the end of a dirty era for the coal plants that dominated America’s electric grid for over half a century. Now, in a whirlwind turnaround, many of them are being revived to fuel the AI era.

Earlier this year, developers announced they would take the coal plant’s corpse—and its invaluable grid interconnections—and resurrect it into the Homer City Energy Campus, a sprawling AI data center complex powered

With U.S. electricity demand projected to surge

“Our grid isn’t short on opportunity — it’s short on time,” said Carson Kearl, Enverus senior analyst for energy and AI. “These grid interconnections are up for grabs for new power projects when these coal plants roll off.

“The No. 1 priority for Big Tech has changed to [speed] to energy, and this is the fastest way to go in a lot of cases,” Kearl told Fortune.

American coal power plunged from 50% of the nation’s grid as recently as 2005 down to just 16% and falling today, courtesy of the shale gas drilling rush and the rise of renewables. But coal still represents more than half of the grid’s carbon emissions. While wind and solar power are emission-free, switching to new gas plants still represents a 60% emissions reduction from coal.

In the last two decades, as more coal plants closed, U.S. power emissions plummeted 40%, accounting for more than 75% of the nation’s total decline in carbon dioxide emissions, according to the Environmental Protection Agency.

The energy research firm Enverus estimates that at least 70 gigawatts of retired coal power capacity—enough to power 50 million homes, or almost 100 data centers—can be converted to clean (or cleaner) power

Power generator and utility owner Xcel Energy (No. 319 on the Fortune 500) is in the process of converting old coal plants to both gas-fired and renewable power from Minnesota to Texas. And many more projects are on the way in the years to come, said Xcel chairman and CEO Bob Frenzel.

“Tech is looking for speed, they’re looking for electricity and, in some cases, we have both,” Frenzel told Fortune. “We’ve been able to use those interconnections quite successfully to repower with more efficient and more clean energy re

Most new power construction in the U.S. is currently concentrated on solar, wind, and accompanying battery energy storage, but the Trump administration’s war on renewables—just when the country needs more power—means wind and solar tax credits expire after 2027.

The clean energy projects underway largely will get built—some utilizing coal interconnections—but much more coal-to-gas switching will occur to meet the needs of AI, especially in gas-rich regions such as Pennsylvania, Texas, and Colorado.

“We as an industry are racing to meet the needs of this new critical national security asset,” Frenzel said of the AI boom. “We’re excited about the opportunity, but it’s going to take an all-hands approach to get it done.

“After [renewable tax credits expire], we as a country must commercialize other assets. Gas is a great bridge fuel, and we’re going to continue to use a lot of gas,” Frenzel added.

In the 2030s, new nuclear and geothermal power facilities will come online, he said, but those generation

In Sherburne County, Minnesota, Xcel is retiring its legacy coal plant, taking the first unit offline last year and fully closing it

In the Texas Panhandle, Xcel just converted its Harrington coal plant to gas-fired power. Up next, is the nearby Tolk coal facility also slated for a switch to gas. Xcel plans to build about 2 gigawatts of new wind and solar power in the area to meet oil and gas industry electrification needs, as well as for the transformation of a crypto mining site into a data center complex, Frenzel said.

Likewise, Xcel is almost finished converting its Pawnee coal plant in Colorado to gas-fired power. Xcel’s Hayden coal plant in Colorado is slated for closure in 2028, and geothermal power is under consideration for that site. Xcel is working with data center developer QTS in the state.

In a more unique twist on coal-to-gas switching, the Intermountain coal plant in Utah is switching to gas, but it’s also utilizing a green hydrogen blend with the gas to make it burn cleaner. And some coal-to-gas involves using battery storage as well. The AES Petersburg coal plant in Indiana is switching to a gas-fired and battery storage combo complex.

Elsewhere in the country, even coal-to-nuclear plans are underway. Bill Gates’ TerraPower is developing a next-generation nuclear plant slated to open

Still, even as coal plant retirements were moved up in recent years, some are being pushed backwards again toward their original closure dates now that the grid is being strained and the Trump administration is championing coal power.

For instance, Maryland’s last coal plant, Brandon Shores, was slated to close this year, but will now stay up until 2029 as a power bridge for the AI boom. Likewise, the J.H. Campbell coal plant in Michigan was extended from its May closure date until at least November.

The Trump administration’s orders to keep “beautiful clean coal” alive are only temporary. The plants are still going to close; they just received stays on their execution dates.

The “clean coal” phrasing was part of a lobbying and marketing push for more modernized—and less dirty—coal plants about 15 years ago, but the language has largely disappeared outside of the White House as coal continues to be replaced

The coal lobbying group, Americans for Balanced Energy Choices, rebranded in 2008 as the American Coalition for Clean Coal Electricity. They gave up on that in 2019, changing to the more succinct and generically named America’s Power. Since then, utilities and railroads have left the group, leaving its membership only to coal companies.

In July, about 85 miles west of Homer City in Pennsylvania, it was announced

That same day, the developers also publicized the largest natural gas producer in the Appalachia region, EQT, would supply both the Shippingport and Homer City projects with a combined 1.5 billion cubic feet per day of gas supplies.

“Just to put this in perspective, that’s enough natural gas to power two of New York City. Scale matters,” EQT CEO Toby Rice told Fortune. “Homer City and Shippingport are just the first steps of multiple steps in multiple projects, because I do believe that cluster effect is real. They already have connections to the grid, which is a huge fast pass.”

EQT is ready to help lead an AI tech boom in Pennsylvania and the broader Appalachia region with the advantage that it’s home to the largest natural gas field in the country, the Marcellus Shale. And EQT has its own pipeline business to connect directly to data centers as needed.

Rice is leading the charge to make natural gas as clean as possible, through improved technology and upcoming carbon capture and storage projects. It incudes a marketing push—after all, “natural gas” sounds much nicer than “methane.” “People need to understand the natural gas decarbonization train has not slowed down,” he said.

Rusty Hutson, the CEO of gas producer Diversified Energy agrees. Methane is the product, he said, and the producers don’t want to waste the gas in emissions. “We want to sell it. At the end of the day, going through a pipeline and going through a meter is much more beneficial to us than any emissions are,” Hutson told Fortune.

While EQT will focus on drilling new wells to feed the AI beast, Diversified operates more mature gas wells that are often unwanted

“Data centers, especially in the Appalachian basin, are going to be a huge demand on natural gas,” Hutson said. “We can’t afford to lose any production because other companies are focused on the drill bit and not really on existing wells and existing operations. That’s where we come in to maintain and produce those wells in an efficient manner to keep them in production for longer.”

As Rice and Hutson argued, the trend is much bigger though than an Appalachia story. Enverus’ Kearl said the AI race may very well be won or lost based on how rapidly old coal plants can be repowered to other generation

“Repowering isn’t just a cost play—it’s a political and logistical shortcut to growing 24/7, low-carbon power,” Kearl said.