Trump’s coal bailout won’t solve the data center power crunch

The Trump administration is spending more than half a billion dollars to help prop up the dying coal industry. It’s also weakening pollution regulations and opening up more federal land to coal mining.

All of this isn’t likely to save the industry—and also isn’t likely to do much to meet the surging demand for power from data centers for AI.

Coal power is expensive, and that isn’t going to change

Aging coal power plants are now so expensive to run that hundreds have retired over the last decade, including around 100 that retired or made plans to retire during Trump’s first term. Offering relatively small subsidies isn’t likely to change the long-term trend. “I don’t think it’s going to change the underlying economics,” says Michelle Solomon, a manager in the electricity program at the think tank Energy Innovation. “The reasons why coal has increased in cost will continue to be fundamentally true.” The cost of coal power grew 28% between 2021 and 2024, or more than double the rate of inflation.

One reason is age: the average coal power plant in the U.S. is around 50 years old, and they aren’t designed to last much longer. Because renewable energy is cheaper, and regulation is likely to ramp up in the future, investors don’t see building new coal power plants as viable. But trying to keep outdated plants running also doesn’t make economic sense.

The new funding can’t go very far. The Department of Energy plans to spend $625 million on coal projects, including $350 million to recommission and retrofit old plants. Another $25 million is set aside for retrofitting coal plants with natural gas co-firing systems. But that type of project can cost hundreds of millions or even a billion dollars for a single plant. (The $25 million, presumably, might only cover planning or a small pilot.)

Other retrofits might only extend the life of a power plant by a few years. Because the plants will continue to be expensive to run, some power plant owners may not think the subsidies are worth it.

Utilities want to move on

If coal power plants keep running past their retirement age, even with some retrofits, costs keep going up for consumers. “That’s something that you really see in states that continue to rely on coal for a big part of their electricity mix,” says Solomon. “Like Kentucky and West Virginia, who have had their cost for power increase at some of the fastest rates in the country.”

In Michigan, earlier this year, the DOE forced a coal power plant to stay open after it was scheduled to retire. The DOE cited an “emergency,” though neither the grid operator nor the utility said that there were power supply issues; the planned retirement of the plant included building new sources of energy to replace it. The utility reported to the SEC that within the first 38 days, alone, it spent $29 million to keep the plant running. (The emergency order is still in place, and being challenged by multiple lawsuits.)

The extra expense shows up on consumers’ bills. One report estimates that by 2028, efforts to keep large power plants from retiring could cost consumers more than $3 billion a year.

Utilities have long acknowledged the reality that there are less expensive energy sources. In the first Trump administration, in 2018, utilities resisted Trump’s attempts to use emergency powers to keep uneconomic coal plants open.

When utilities plan to retire a power plant, there’s a long planning process. Plants begin making decision to defer maintenance that would otherwise be necessary. And many won’t want to reverse their decisions. It’s true that demand for power from data centers has led some utilities to keep coal plants online longer—and electric bills are already soaring in areas near large data centers. But Trump’s incentives may not make much difference for others. The last coal plant in New England just shut down years early, despite the current outlook for data centers.

“Utilities do have to take a long-term view,” says Lori Bird, director of the U.S. energy program at the nonprofit World Resources Institute. “They’re doing multi-year planning. So they consider the durability and economic viability of these assets over the longer term. They have not been economic, and they’re also the highest-emitting greenhouse gas facilities.” Even if the Trump administration has rolled back environmental regulations, she says, future administrations could reverse that; continuing to use coal is a risky proposition. In most states, utilities also have to comply with renewable power goals.

There are better solutions

It’s true that the U.S. needs more power generation, quickly. It’s not clear exactly how much new electricity will be needed—some of that will depend on how much AI is a bubble and how much tech companies can shrink their power usage at data centers. But the nonprofit Rewiring America calculated that data centers that are under construction or in planning could add 93 gigawatts of electricity demand to the U.S. grid by the end of the decade.

The nonprofit argues that some or even all of that new capacity could be covered by rooftop solar and batteries at homes. Cheap utility-scale renewable power plants could obviously also help, though the Trump administration is actively fighting them. Battery storage can help provide 24/7 energy. One analysis of a retiring coal plant in Maryland found that it would be less expensive to replace it with batteries and transmission upgrades than to keep it running.

Temporarily saving a handful of coal power plants won’t cover the new power needs. It would add to air pollution, water pollution, and climate pollution. And it would significantly push up power bills when consumers are already struggling. Real support for an “energy emergency” would include faster permitting and other work to accelerate building affordable renewable energy, experts say.

“Making sure that resources can compete openly is really important,” says Solomon. “It’s important to not only meet the demand from AI, but make sure that it doesn’t raise costs for electricity consumers.”