The surging demand for electricity necessary to support emerging technologies is compelling the United States to continue relying on outdated coal as a primary energy source.
Due to concerns about grid reliability and the anticipation of heightened electricity needs, retirement timelines for the nation’s aging coal-powered plants are being extended, leading operators to maintain their capacity.
This shift to prolong the operation of these facilities highlights a significant challenge confronting the Biden administration. As the United States endeavors to lead in artificial intelligence and manufacturing, there’s an unprecedented uptick in energy consumption conflicting with decarbonization objectives. The International Energy Agency estimates that AI applications, such as ChatGPT, consume nearly ten times more electricity than Google Search.
Approximately 54 gigawatts of coal-fired generating assets, comprising around 4 percent of the nation’s total electricity capacity, are projected to be retired by the decade’s end, according to S&P Global Commodity Insights, citing reliability concerns.
Joe Craft, CEO of Alliance Resource Partners, one of the largest U.S. coal producers, remarked, “You can’t replace fossil plants fast enough to meet demand. To be a first mover in AI, we’re going to have to embrace preserving what we have.”
Companies like Alliant Energy are postponing retirements, with plans to convert coal plants to gas pushed back to 2028. Similarly, FirstEnergy has revised its coal phase-out target from 2030 due to resource sufficiency worries.
Grid Strategies forecasts a 4.7 percent growth in U.S. electricity demand over the next five years, nearly double the previous forecast, fueled by new manufacturing, industrial capacity, and data centers supporting AI and cloud computing. Data centers are anticipated to contribute to 9 percent of U.S. electricity demand by 2030, as per a study by the Electric Power Research Institute.
The White House aims for a carbon-free power sector by 2035. Last month, the Environmental Protection Agency finalized regulations to phase out coal-fired power plants by 2032 unless they integrate costly carbon capture systems. Despite criticism, the EPA asserts that these rules are legally sound and can ensure reliable and affordable electricity while reducing pollution.
However, Indiana and 24 other states are challenging the EPA rules, arguing for the necessity of increased energy production. Indiana Governor Eric Holcomb emphasized the importance of energy security in the competition for AI dominance.
Coal’s share of U.S. utility-scale electricity generation continues to diminish, comprising 16 percent of the nation’s supply last year, down from nearly 40 percent in 2014, according to the U.S. Energy Information Administration.
Seth Feaster from the Institute for Energy Economics and Financial Analysis cautioned against interpreting delays in retirement as a resurgence in coal usage. The EIA predicts a further 4 percent decline in coal-fired power generation this year, with low utilization rates persisting.
The discussion on AI’s impact on humanity continues to be debated, as illustrated in the video “AI: a blessing or a curse for humanity?” by FT Tech.