Why Data Centers Still Rely on Coal and Gas
Data centers need vast amounts of energy to fuel servers and process the information that keeps our websites, applications and generative AI models running. The United States has more data centers than anywhere else in the world and the extra energy demand is straining transmission grids and driving up the cost of electricity.
Data centers consume enormous amounts of electricity to run servers and power applications like generative AI. In the United States — which hosts more data centers than any other country — that surge in demand is straining transmission networks and pushing up power prices. Faced with rapid load growth, many grid operators and utilities have turned to fossil-fired generation to ensure short-term reliability, in some cases delaying retirements of oil, gas and coal plants or rethinking earlier clean-energy plans.
In PJM Interconnection, the large Eastern U.S. grid that serves 13 states including Virginia, operators last year postponed or canceled planned closures for roughly 60% of fossil plants that had been scheduled to retire. Many of those were peaker plants that run only during high demand. Utilities and grid operators argue they simply need every available megawatt to avoid shortages as demand spikes.
Several utilities that once promised cleaner futures have adjusted course. Dominion Energy in Virginia, which previously targeted 100% renewable sourcing by 2045, is now planning substantial investments in gas and nuclear capacity through 2039. NV Energy in Nevada says rapid data center growth could make it difficult to hit a 50% renewable target by 2030. NextEra Energy in North Carolina has stated it no longer sees a realistic path to zero-carbon emissions by 2045.
Why are fossil fuels the fallback? The loads data centers place on the grid are large, fast-changing and sometimes unpredictable. That profile favors dispatchable, on-demand generation that can be ramped up quickly. Ember analyst Dave Jones has pointed out that AI data centers can already match the electricity use of about 100,000 households, and the biggest new facilities under construction may require up to 20 times that. For many operators, on-site or nearby natural gas capacity is the quickest, cheapest way to guarantee reliable power.
International Energy Agency data underscores the point: in the U.S., natural gas provides more than 40% of data centers’ electricity and coal about 15%. The IEA also projects that coal and gas will supply over 40% of the additional power needed for data centers through at least 2030, making new data center demand a significant near-term driver of fossil-fuel generation growth.
Market and policy forces reinforce the trend. Relatively low U.S. natural gas prices make gas competitive; tariffs on imported solar equipment have slowed some renewable deployments; and political shifts in some jurisdictions have reduced emphasis on climate rules that would speed clean-energy adoption. Some government officials have signaled support for fossil fuels and nuclear as tools to sustain industrial and AI-related growth, framing decarbonization as a choice against other economic priorities.
Clean-energy advocates counter that this trade-off is avoidable. Investments in transmission upgrades, large-scale battery storage, demand management and smarter grid planning can integrate far more renewables while maintaining reliability. In many regions renewables already supply substantial shares of data center power: nearly a quarter of U.S. data centers draw at least some electricity from clean sources, especially in sunny southern and southwestern states. Globally, the IEA expects renewables and natural gas together to represent over 65% of data center electricity by 2030, and in places like India and China a mix of renewables and coal is currently dominant.
Local communities are also pushing back on rapid data center expansion because of concerns about energy affordability, infrastructure strain and environmental impacts. A Quinnipiac University poll found 65% of Americans opposed having a data center near their home. Residents in New Jersey successfully blocked a proposed facility, and Maine legislators backed a moratorium on new data center construction until November 2027 to study grid and environmental effects.
Critics warn that without coordinated planning — stricter siting rules, better power-procurement standards, and targeted investments in transmission, storage and clean generation — sprawling data center growth could place extraordinary burdens on electric systems, the environment and host communities. Supporters of balanced policy say those targeted measures can accommodate continued digital and AI expansion while limiting renewed dependence on coal and gas.