AI Power Hunger May Breathe New Life Into Coal
CNBC reported Sunday that the explosive growth of AI data centers is generating electricity demand so intense it may force a coal revival across the United States grid.
The commentary, from CNBC’s Jim Cramer, followed his interview with Kenny Young, chief executive of Babcock & Wilcox, a 160-year-old engineering firm now targeting the power generation buildout.
AI Is Reshaping the US Power Equation
The scale of data center growth is straining grid capacity in ways the market has been slow to appreciate. Analysts estimate the US may need 90 to 100 gigawatts of new generation capacity if construction continues at its current pace.
Coal currently accounts for roughly 15 to 17 percent of US electricity generation. That is sharply down from 50 percent in 2007. Yet the fuel still powers between 173 and 190 gigawatts of capacity nationally.
The Trump administration, including Energy Secretary Chris Wright, has actively pushed to keep existing coal plants operating rather than allow further retirements. The White House frames the fuel as both a domestic resource and a national security asset.
Background: Coal’s Long Decline
Coal’s retreat from the US grid has been underway for more than a decade. Lower natural gas prices, tighter environmental rules, and falling renewable costs all accelerated the fuel’s decline after its 2007 peak.
The Biden-era regulatory environment hastened plant closures further. But the current administration has reversed course on several environmental rules, seeking to extend the operational life of coal-fired plants rather than approve their decommissioning.
Babcock & Wilcox and the Data Center Boom
Babcock & Wilcox carries a $2.7 billion project backlog. The bulk of that — $2.4 billion — is tied to a contract with Base Electron, an entity backed by Applied Digital, a high-performance computing infrastructure company.
Applied Digital’s market value has climbed from roughly $1.5 billion a year ago to approximately $12 billion today. The company also holds a major supply relationship with CoreWeave, which accounts for the largest share of Applied Digital’s reported $16 billion backlog.
Cramer flagged that short sellers hold roughly 32 percent of Applied Digital’s outstanding shares. He attributed that skepticism partly to the company’s ties with B. Riley, a brokerage currently under SEC investigation.
Babcock & Wilcox also possesses proprietary capability to build natural gas power plants, giving it optionality beyond coal as utilities weigh their generation mix.
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