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January 26, 2026
AI/Data Center Resources
Utilities nationwide are receiving an increasing number of requests from data center developers for large amounts of energy to power their facilities. This represents a reversal of a trend since 2009 of relatively flat energy demand and predictable growth. Studies show that the projected electricity demand of data centers in 2028 could reach 130 gigawatts (GW). Data centers could represent up to 12% of total U.S. electricity demand by 2028—up to 580 terawatt-hours per year. Forecasts estimate that overall U.S. electricity demand will reach about 1,250 gigawatts (GW) by 2050, a 78% increase from 2023 levels. About 80 GW of electricity will need to come online every year for the next 20 years to meet that demand.
To meet this unprecedented increase in demand, utilities are proposing to extend the life of existing coal power plants by delaying planned retirements, repower unused or mothballed plants, and build new natural gas power plants.
Some utilities are moving to extend the life of coal power plants and delaying already-announced facility retirements. The U.S. Department of Energy (DOE) has taken steps to facilitate or even encourage such developments. Invoking the Federal Power Act, DOE has issued several emergency declarations throughout 2025 to stop the retirements of eight coal units across the country, representing a capacity of more than 17 gigawatts. The agency has justified its decisions in the name of grid reliability, to keep electricity prices affordable, and to avoid blackouts.
Coal power plants are a reliable, well-tested baseload technology that can operate 365 days per year with limited interruptions. However, that continuous availability comes at a cost: emissions of toxic particulate matter that harms the environment and nearby communities, as well as greenhouse gases that heat the planet. Coal-fired plants also require substantial amounts of water to produce high-temperature steam, which spins turbines and generates electricity. Keeping coal plants running longer than planned would increase emissions and cost ratepayers billions of dollars in higher maintenance costs that are directly reflected in higher bills for consumers.
Until recently, a shift in the energy paradigm had been occurring. Over the last decade, as the cost of natural gas and clean, renewable energy fell, coal power plants closed rapidly, resulting in lower carbon emissions. Because coal power is the most polluting source of energy, closing these plants vastly improved air quality and the health of those who live close to them by preventing hundreds of millions of metric tonnes of carbon dioxide and other pollutants from being released into the atmosphere. Between 2000 and 2023, coal's share of the U.S. electric grid declined from 51.7% to 16.2%. The main factor in this dramatic decline was the replacement of coal-fired plants with cheaper natural gas-fired and renewable energy plants. The cost of solar energy declined by 85% between 2010 and 2023, and solar and wind’s share of U.S. electricity generation is projected to continue to grow slowly but steadily in the coming years.
But now, the skyrocketing energy demands of data centers are giving utilities second thoughts about retiring coal power plants. Nationwide, electric utilities have postponed the already-announced retirements of 15 coal-fired power plants, which, in total, emitted almost 65 million metric tonnes of greenhouse gases in 2023. More un-retirement announcements may come in the next few months, as utilities, grid operators, and the DOE closely reexamine whether coal power assets need to be kept online. For example, in Colorado, retirements of two coal power plants are being reconsidered due to increased energy demand, which could also affect other planned shutdowns in the state.
Surging data center development is also prompting utilities to construct new gas-fired power plants. More than 100 GW of new gas-fired facilities have been announced in the last few years, and most are expected to come online before 2030. There was approximately 500 GW of natural gas capacity in the United States in 2022, spread across 2,000 gas-fired plants that emitted 659 million metric tonnes of carbon dioxide. If utilities add 100 GW of new gas facilities, it could potentially result in more than 100 million tonnes of carbon dioxide emissions annually as well as other harmful pollution. This would continue to harm the environment and compromise the health of people living near these new power plants.
Extracted methane gas is carried to power plants via pipelines—at a high cost. Constructing new gas-fired power plants entails building expensive new pipelines to supply them. Interstate pipeline construction entails a lengthy permitting process that can take up to seven years due to land acquisition, required environmental assessments, and federal and state approvals, thereby increasing total infrastructure costs. Building these pipelines to deliver natural gas to plants powering data centers can have significant environmental impacts, including contamination of drinking water, soil erosion, air pollution, and loss of wildlife habitat. Leaks of methane—a superpollutant and potent greenhouse gas—from pipelines and compressor stations pose a threat to the climate and nearby communities.
Data centers have other options, such as deploying clean energy technologies like solar, wind, and geothermal. Co-locating renewable energy generation with data centers is an alternative to plugging into the grid. Excess solar generation can be sold back to the grid, increasing renewable energy’s share and making the grid more stable. It can also be stored in batteries for later use. Installing solar panel arrays and battery storage devices to power data centers reduces overall carbon emissions and decreases the reliance on carbon-intensive diesel generators for backup power. Battery storage can also be used as a grid ancillary resource, providing an additional revenue stream for data centers.
Co-locating renewable energy with data centers enables the efficient siting of generation facilities next to the load, reducing the need for the data center to draw energy from a fossil-fuel-based power grid. It also minimizes the utility's need for costly network upgrades and interconnections, reducing the burden on electricity customers and providing a win-win solution.
Author: Miguel Yañez-Barnuevo
Advancing science-based climate solutions
Top-Rated Climate Nonprofit – 4-Star Charity