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The staggering demand for the electricity needed to power next-generation technology is forcing the US to rely on yesterday’s fuel source: coal.
Retirement dates for the country’s aging fleet of coal-fired power plants are being postponed as concerns about grid reliability and expectations of rising electricity demand force operators to keep capacity online.
The shift in phasing out these facilities underlines a growing dilemma facing the Biden administration as the U.S. race to take the lead in artificial intelligence and manufacturing drives unprecedented growth in energy demand that conflicts is in line with the decarbonisation targets. The International Energy Agency estimates that the AI application ChatGPT uses almost ten times as much electricity as Google Search.
An estimated 54 gigawatts of U.S. coal-fired power plants, about 4 percent of the country’s total electricity capacity, will be retired by the end of this decade, a 40 percent downward revision from last year, according to S&P Global Commodity Insights. , citing reliability issues.
“You can’t replace fossil fuel plants fast enough to meet demand,” said Joe Craft, chief executive of Alliance Resource Partners, one of the largest coal producers in the US. “To be a pioneer in AI, we will have to embrace preserving what we have.”
Operators delaying retirements include Alliant Energy, which last week postponed plans to convert its coal-fired power plant in Wisconsin to gas from 2025 to 2028. Earlier this year, FirstEnergy announced it was meeting its 2030 goal to retire coal phased out, citing “resource adequacy concerns”. ”.
Grid Strategies, a consulting firm, forecasts U.S. electricity demand growth of 4.7 percent over the next five years, nearly doubling its forecast from a year earlier, citing new manufacturing and industrial capacity and data centers used to power everything from AI to crypto mining to the cloud. A study released Wednesday by the Electric Power Research Institute found that data centers would account for 9 percent of U.S. energy demand by 2030, more than double current levels.
The White House has set a goal of achieving an energy sector free of carbon pollution by 2035. Last month, the Environmental Protection Agency finalized controversial rules to phase out coal-fired power plants starting in 2032 unless expensive carbon capture systems are installed.
The EPA found in its analyzes that the energy sector can meet demand while reducing pollution and providing reliable, affordable electricity under these rules, a spokesperson said, adding that the agency “believes the rules are on a strong legal basis lie”.
Indiana is leading a group of 25 states in a lawsuit to block the EPA rules.
“We need more energy, not less,” Republican Indiana Governor Eric Holcomb told the Financial Times. “We as Americans absolutely cannot afford to lose the AI war.”
According to the U.S. Energy Information Administration, U.S. coal-fired electricity generation is declining over the long term, accounting for 16 percent of the nation’s electricity supply last year, up from nearly 40 percent in 2014.
Seth Feaster, a data analyst at the Institute for Energy Economics and Financial Analysis, cautioned against equating reports of retirement delays with older generations. The EIA predicts that U.S. coal-fired electricity generation will decline another 4 percent this year and that coal-fired power plant utilization rates will remain low.
“Simply postponing a retirement date does not mean those plants will be used,” Feaster said. “The trajectory of coal hasn’t really changed.”