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July 31, 2026 - One of the US’s biggest utilities has outbid a data centre developer to buy a coal plant in West Virginia, as the AI-driven electricity crunch spurs competition for a power source in structural decline.
American Electric Power agreed to acquire Longview’s coal plant, a 710-megawatt facility in the mountainous coal-rich state.
The utility, which operates in 11 states and serves 5.6mn customers, narrowly beat a “household name” data centre developer for control of the plant after a “competitive bidding process”, according to a person familiar with the matter. The size of the transaction was not disclosed.
The bidding war underlines how coal has been brought in from the cold as US electricity demand soars. According to ICF, a consultancy, US power demand will increase by 39 per cent by 2035.
While coal’s share of US electricity generation has declined by 63.7 per cent since its 2007 peak, it has risen 1.5 per cent since January 2025, according to the International Energy Agency.
The Longview deal is a rare example of a utility taking on new coal assets since the industry slid into decline. Recent examples of plants changing hands have largely been distressed sales to private equity.
The Trump administration is attempting to revive and rehabilitate the coal industry, delaying the closure of six plants and committing more than $1bn to build and refit two dozen plants and an export terminal on the west coast.
Utilities including Xcel and Duke have also postponed closing some of their coal assets.
While tech companies have stressed their aim to power data centres with clean energy, competition for electricity resources and byzantine permitting processes to build new plants have led them to pursue dirtier power sources.
Elon Musk’s Colossus 2 data centre project recently installed 59 natural gas turbines, which critics and environmental activists called an air-quality hazard.
The data centre developer that bid on Longview considered taking the plant off the grid in order to use it exclusively for its AI facility, in a move that would have eliminated power from the grid for an estimated 355,000 homes.
Such a decision would probably have sparked backlash from PJM, the region’s grid operator, and affordability advocates.
“You’d be persona non-grata,” said a source familiar.
AEP’s chief financial officer told the FT that the company fought “aggressively” to gain control of Longview, having recently lost other bidding wars for non-coal power assets in the region.
“Prior management teams had said they want to shut down coal plants, but West Virginia is very much a coal state,” said CFO Trevor Mihalik.
The company has also acquired a permit to build a 1,200MW gas plant on the site, although it is unclear if or when the project will break ground.
Longview is one of the youngest coal plants in the US, completed for $2bn in 2011. Developer Jim Laurita conceived of the idea before the industry entered a steep decline and banks were willing to finance coal projects.
The plant was touted as one of the most efficient and clean coal plants in the country when it came online.
“There wasn’t this stigma against coal at that time, and power prices for coal were expected to go extremely high,” Laurita said.
But mechanical issues, the discovery of cheap, abundant shale gas and Obama-era environmental regulations made the plant uncompetitive, forcing it into bankruptcy in 2013. A consortium of private equity players including KKR later took control of Longview.
At times the plant tried to keep up with the era’s clean energy zeitgeist, exploring carbon capture and an on-site solar farm, although neither was built. It also faced backlash from environmental activists, who successfully pressed for emissions caps and annual payments of $500,000 to a fund addressing environmental damage.
“Many people didn’t think coal was a good idea in the early 2000s — we had heard about this thing called climate change,” said Jim Kotcon, a former chapter chair of the West Virginia Sierra Club.
The plant fell on hard times again in 2020, filing for Chapter 11 bankruptcy with over $350mn in debt.
AEP said it bought the plant to serve growing demand in PJM, which includes 13 states and Washington, DC. The utility has 18 gigawatts of contracted data centres in the region.
West Virginia lawmakers are seeking to capitalise on the AI boom. The state’s House Bill 2014 allows data centres to build their own power grids, and limits local governments’ ability to reject projects on zoning, noise and environmental grounds. Google recently purchased land in Putnam County for a multibillion-dollar data centre project.
Due to its proximity to AI hubs such as Virginia’s “data centre alley”, Governor Patrick Morrisey has pledged to triple the state’s electricity generation capacity to 50GW by 2050 for use inside the state and to export.
Some West Virginians are optimistic about the data centre boom as a way to boost the demand for coal. But as in other parts of the US, proposed projects are facing opposition from locals concerned about their impact on energy prices and water.
“People are happy to see the coal industry [is] doing better,” said state senator and coal miner Chris Rose. “But there is hesitation and a lot of unknowns, so we want guardrails.”
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