AI’s Demand for Electricity Delays US Coal Phaseout

Doug Sutton<br>Partner & Interim CEO

Doug Sutton
Partner & Interim CEO

The increasing energy requirements of artificial intelligence (AI) are causing delays in the planned shutdowns of aging coal plants in the US. This has become evident as utilities and grid operators extend the operational life of coal plants to meet rising power demands and ensure grid reliability. A recently article in the Financial Times highlighted this challenge.

Alliant Energy announced a delay in converting its Wisconsin coal plant to gas, pushing the deadline from 2025 to 2028. Similarly, PJM grid operator requested Talen Energy to keep its Maryland coal units running longer, and FirstEnergy abandoned its 2030 coal phaseout target, citing resource adequacy concerns. These delays reflect a broader trend of postponing coal plant retirements, with S&P Global Commodity Insights revising its forecast down by 40%, predicting 54GW of US coal capacity to retire by the end of the decade.

Brent Bilsland, CEO of Hallador Energy, noted the difficulty in meeting the escalating power demand with the existing fleet. Grid Strategies projects US electricity demand to grow by 4.7% over the next five years, nearly double the previous year’s projection. A study by the Electric Power Research Institute suggests data centers will account for 9% of US power demand by 2030, more than doubling current levels. Meanwhile, renewable projects face multiyear delays due to equipment shortages, transmission issues, and bureaucratic hurdles.

Patrick Finn, a senior analyst at Wood Mackenzie, expressed concerns about balancing growing energy demands with increasing clean energy percentages. Critics argue that the Biden administration’s EPA guidelines to phase out coal plants by 2032 may exacerbate reliability problems. Bill Scherman, a partner at Vinson & Elkins, and Randall Atkins, former chair of the National Coal Council, have criticized the policies as shortsighted.

Despite these criticisms, the EPA maintains that its power plant rules are on firm legal ground, asserting that the sector can meet electricity demand while maintaining reliability, affordability, and reducing pollution. The Biden administration aims for a carbon-free power sector by 2035. Although coal’s share of US electricity has declined significantly over the past decade, from nearly 40% in 2014 to 16% last year, delays in coal plant retirements pose a challenge to achieving this goal.

Environmental campaigners argue that postponing retirements is not a long-term solution and stress the importance of addressing power demand growth in a cost-effective and environmentally responsible manner. Seth Feaster from the Institute for Energy Economics and Financial Analysis notes that the slowdown in coal retirements does not alter the overall decline trajectory for coal, with US coal generation expected to fall by another 4% this year.

AI Energy Technologies’ Breakthrough with Navigator

Many experts say the fight against climate change hinges on the transition from fossil fuels to renewable energy sources. The US, for example, has set an ambitious goal of achieving a carbon-free power sector by 2035.

While the long-term solution lies in accelerating the adoption of renewables like solar and wind power, a stop-gap solution is needed to bridge the gap between current energy needs and a future powered by clean energy sources. This is where AI Energy Technologies’ Navigator can play a significant role right now to improve the quality of air we breathe. 

Navigator is a software solution that leverages the power of artificial intelligence (AI) and machine learning (ML) to optimize energy production efficiency in existing power plants.  It utilizes AI to analyze plant data and make real-time recommendations to plant operators, enabling the plant to produce the same amount of power while consuming less fossil fuel. This translates to a significant reduction in greenhouse gas emissions, particularly CO2, a major contributor to climate change.

Independent audits have confirmed Navigator’s effectiveness.  In a two-year deployment at a major European utility, Navigator led to efficiency improvements of 1% to 3%.  This seemingly small increase translates to real-world benefits: millions of dollars saved annually and a substantial reduction in tons of CO2 emissions.

Beyond its environmental benefits, Navigator boasts several advantages that make it an attractive solution for power plant operators. Unlike traditional upgrades that require substantial upfront investments in new hardware, Navigator can be installed within a few months and requires no additional hardware. This translates to energy production cost savings, with a return on investment (ROI) estimated to be between 5x and 9x the annual investment in software. 

The emergence of AI Energy Technologies Navigator system presents a unique opportunity. It enables utilities to optimize energy production from existing infrastructure,  while reducing our dependence on fossil fuels and their environmental impact. This provides valuable breathing room as we continue to develop and scale renewable energy sources. Navigator serves as a bridge solution, enabling a responsible transition towards a sustainable energy future powered by clean energy sources.