The rise of artificial intelligence (AI) and the data centers that power it is reshaping the energy landscape, presenting both challenges and opportunities for the United States. As data centers intensify energy demand and strain power grids, developers are seeking new locations beyond traditional tech corridors. This shift opens a door for communities historically reliant on coal to repurpose abandoned mines and infrastructure, potentially sparking economic revival.
The energy demands of AI data centers are projected to surge, with consumption expected to rise by between 325 and 580 TWh by 2028. This growth could increase data centers’ share of total U.S. electricity consumption to between 6.7% and 12.0% by 2028, according to the Lawrence Berkeley National Lab. Additionally, AI data centers consumed around 66 billion liters of water for cooling in 2023, a figure expected to grow significantly by 2028. These demands underscore the need for strategic siting and sustainable practices.
Coal communities, particularly in Appalachia, the interior, and Western coal regions, have faced severe economic decline as coal severance and tax revenues have plummeted. For instance, West Virginia reported an 83% decline in severance tax collections in fiscal year 2024. The closure of coal mines and power plants has led to job losses and revenue shortfalls, straining local budgets and services. Tribal Nations, such as the Navajo, Hopi, and Crow, have also experienced significant impacts from the decline of coal.
The opportunity to repurpose existing coal infrastructure for data centers and clean energy generation could revitalize these communities. By attracting investments in hyperscale data centers, these areas can generate new revenue streams from property taxes, land reclamation, and energy investments. For example, data centers in Northern Virginia have contributed an estimated 46,000 jobs and up to $10 billion in economic impact to the state’s economy.
To fully capitalize on this opportunity, a collaborative approach involving federal, state, and tribal governments is essential. Four key actions are recommended: establishing a Federal-State-Tribal Partnership for site selection, developing a national pilot program for a GIS-based site selection tool, promoting collaboration between states and utility companies to enhance grid resilience, and laying the groundwork for a knowledge economy centered around data centers.
This shift from an extraction-based economy to an information-based one could reverse the brain drain and inspire research programs at nearby academic institutions. By harnessing the potential of AI and data centers, coal communities can lead America’s energy production and become tech innovation hubs, ensuring the U.S. continues to lead in the AI race.
The implications for markets are profound. The repurposing of coal infrastructure for data centers and clean energy generation could attract significant investments, creating new economic opportunities and job growth. This transition could also drive innovation in energy storage, grid resilience, and sustainable practices, shaping the future of the energy sector. As the market adapts to these changes, coal communities could emerge as key players in the AI and data center landscape, contributing to a more diverse and resilient energy economy.