Coal’s Unexpected Role in the Age of AI and Industrial Reshoring

For more than a decade, the narrative around coal in the U.S. has been remarkably consistent: declining investment, shrinking capacity, and the steady rise of natural gas and renewables. But in recent conversations Krishnan & Associates (K&A) has held with coal plant operators across the country, a different picture is emerging. Coal, while still on a long-term downward trajectory, is being called back into service in ways that few anticipated.

What’s driving this shift is not nostalgia or policy reversal—it’s the brute force of demand growth from AI, data centers, and manufacturing. Paired with a temporary easing of policy pressures, operators are being asked to deliver more from a fleet that, until recently, was left in maintenance-only mode.

A Decade of Deferred Investment

Over the last 10 to 15 years, most coal plants received just enough funding to remain online. Depressed wholesale prices, the rapid growth of gas and renewables, and regulatory uncertainty meant that few owners wanted to make major upgrades. Maintenance was deferred, performance slipped, and many units settled into a lower baseline of availability and efficiency.

That “survival mode” made sense in a market where coal was expected to fade quietly into the background. But conditions have changed.

Demand Is Redefining the Equation

The surge of AI and data center development is creating massive, round-the-clock power requirements that intermittent renewables and natural gas alone struggle to cover. At the same time, industrial demand is climbing as supply chains and manufacturing shift back to the U.S. under “Make in America” initiatives.

This combination has injected new urgency into system planning. Coal units, once sidelined, are being dispatched more often as a stability and reliability resource. The message from utilities and grid operators is clear: until new capacity can be built, the existing fleet must carry more of the load.

A Policy Breathing Space

Decarbonization goals have not disappeared, but there has been a noticeable easing of CO₂-driven measures in the short term. This has given operators a window to focus less on compliance for its own sake and more on practical improvements in efficiency and performance.

At the same time, management expectations have shifted. No longer content with simply keeping units online, executives are pressing for measurable results: improved heat rates, higher availability, and incremental megawatts that can capture value in today’s power markets.

A Portfolio of Efficiency Gains

Plant operators describe a portfolio approach to efficiency improvements, with no single silver bullet but many areas where incremental progress adds up:

  • Combustion optimization and tuning, to improve balance and reduce fuel losses.

  • Turbine upgrades and steam path improvements, to recapture output lost over years of wear.

  • Condenser and cooling system optimization, to eliminate heat rate penalties at the back end.

  • Advanced controls, digital monitoring, and automation, to enable precise, real-time operations.

  • Fuel handling and preparation improvements, to ensure consistency and reduce variability.

  • Stronger maintenance discipline and predictive diagnostics, to prevent forced outages and extend asset life.

The common thread is ROI: each improvement is expected to deliver quantifiable benefits in megawatts, heat rate, or avoided downtime.

Coal’s Evolving Role

None of this changes coal’s long-term outlook. Retirement schedules and policy trends still point toward decline. But in the short to medium term, coal is being asked to play a role few expected: a reliability hedge in a market reshaped by AI, data centers, and industrial growth.

For technology providers, the implications are significant. Solutions that can demonstrate cleaner, more efficient, and more reliable operation are finding receptive audiences among operators under pressure to deliver. The maintenance-only mindset is giving way to targeted, selective upgrades, and those who can back their claims with references and clear ROI will be best positioned.

Coal may not be the future, but for now, it remains a critical part of how the U.S. is managing the demands of its energy transition.

Further Listening

For a deeper dive into how U.S. power markets are evolving to handle rising data center load, electrification, and the role of conventional generation, listen to Podcast 16 with Michael Bryson of PJM on the Unlocking the Energy Trilemma series. The discussion touches on many of the same challenges shaping coal’s evolving role in today’s market.

🎧 Listen here: https://krishnaninc.com/energy-podcast