November 17, 2024 - US utility producer Southern Co. has indicated that, due to increasing energy demand from data centers and other commercial and industrial properties, coal-fired power is being considered an option to meet the expected demand.

Chris Womack, CEO of Southern, told Bloomberg that the company is considering an “all of the above” generation plan and, as part of its strategy, could extend the life of its four-unit, 3,450MW Plant Bowen coal-fired facility in Georgia. The plant has no retirement date, though it has proposed shutting down units one and two by the end of 2028.

“As we look at responding to demand growth, looking at coal operating longer is a consideration,” Womack said. “Maybe those units [at Bowen] get extended further into the next decade before they retire.”

Womack also noted that the growing need for power supports postponing the retirement of coal-fired units. He also cited relaxed emissions rules under the Trump administration as a factor that could extend the operational life of these facilities.

In its 2022 Integrated Resource Plan (IRP), the company planned to close most of its coal-fired fleet by 2028 and exit coal-fired generation by 2035. Womack argued that any extension of its coal assets would not impact its plan to reach net zero by 2050.

US utilities are scrambling to secure energy sources amid projections of surging demand driven by data centers powering artificial intelligence. One solution under consideration is extending the lifespan of aging fossil fuel plants.

Coal power producer Hallador Energy has cited the surge in demand from data centers as a “meaningful opportunity” for the fossil fuel sector. It recently signed a non-binding term sheet with an unnamed data center developer to supply it with energy over a prolonged period.

Interest in bolstering natural gas assets has also permeated the sector, with several data center companies signing agreements with natural gas producers. For example, this week, GPU cloud provider Sharon AI announced a deal with New Era Helium to form a joint venture to design, develop, and operate a 90MW natural gas-powered data center in New Mexico.

Dominion Virginia’s latest IRP projected a more than 100 percent increase in electricity usage in the next 15 years, driven primarily by forecasted data center load growth across the state. The plan's power generation profile is derived mainly from carbon-free sources. However, Dominion projects that at least 20 percent will be filled by new natural gas generation.

In addition, according to a report by S&P, skyrocketing US data center growth could lead to natural gas demand reaching up to three billion cubic feet per day (bcf/d), with demand from data centers alone climbing as high as six bcf/d by 2030.