If You Can’t Beat ‘Em, Join ‘Em: Coal Producer To Produce 5.5 Gigawatts Of Solar Power
Data centers are expected to drive a surge in demand for coal power in the US, but the leading coal producer Peabody is not waiting around for that to happen. Following a series of setbacks in recent years, Peabody is converting some of its properties to solar power plants, and they are not talking small potatoes. The question is, why?
Coalfields Down, Solar Power Up
Part of the answer is fairly straightforward. A movement is already afoot to repurpose old coalfields for solar power. Infrastructure and remediation issues can present obstacles, but Peabody apparently has suitable sites in hand.
Like other coal companies, Peabody is scrambling for revenue in a shrinking market. The data center boom has helped to extend the life of some coal power plants, at least temporarily, but energy planners are already looking at alternative sources to fill the growing demand over the long run.
S&P Global took a look at the picture earlier this month, noting that the rate of coal power plant closures has slowed compared to earlier years. S&P also observed that the data center boom “could be a lifeline for coal power.”
However, slowing down is not the same thing as stopping. “Even with the delays, utilities plan to shutter 61.0 GW of coal-fired power plants between 2025 and 2030, which is equal to more than one-third of the coal capacity online in 2024,” S&P concluded.
It’s not just power generation. The steel industry is also transitioning from a coal-dependent model to new zero and low-emission technologies.
In March of 2022, Peabody announced its solar power plans with the launch of a new joint venture called R3 Renewables, in partnership with Riverstone Credit Partners and Summit Partners Credit Advisors, with an initial goal of developing more than 3.3 gigawatts of solar and 1.6 gigawatts of energy storage located on former coal sites in Indiana and Illinois.
“The partnership brings together collective strengths in renewable energy project development, environmental management, extensive land holdings, permitting, and capital markets,” the partners explained in a press statement dated March 1, 2022.
“We are pleased to announce this new joint venture as part of Peabody’s commitment to be the coal producer of choice,” said Peabody and President Jim Grech, by way of affirming the company’s core business. However, Grech also pointed out that R3 will be “creating additional value from our existing assets,” meaning former coal sites.
In an interesting twist, Grech also stated that R3 will be “supporting our own and our customers’ ESG ambitions.”
From Coalfields To Solar Power
Highlighting ESG (environment, social, governance) ambitions in a public statement made sense at a time when the White House supported the principles of corporate social responsibility, particularly in regards to solar and other renewables.
After January 20 of next year the ESG references may go away, but it’s full steam ahead for Peabody’s solar power plan. In the latest development, the leading renewable energy company RWE is acquiring a majority interest in the R3 venture, buying out Summit and Riverstone. Peabody still retains 25% equity interest.
“The acquisition, which is focused on the development of large-scale solar and energy storage projects on reclaimed mine lands, demonstrates RWE’s commitment to innovative and clean energy solutions,” RWE explained in a press statement on November 21.
Under the new arrangement, RWE acquires seven of the 10 sights. It will also develop the other three sites in a new joint venture with Peabody.
“Our new partnership with a globally recognized renewable energy leader represents significant added momentum in our initiatives to develop renewable projects on Peabody’s formerly mined lands,” he enthused, skipping the shoutout to coal in this particular statement.
Solar Power Meets Agriculture
“Peabody is committed to advancing environmental sustainability, creating additional value from our assets, and providing added economic benefits for the communities in which we work and live,” Grech also added.
The sustainability angle is somewhat questionable as applied to coal. Solar panels are a different kettle of fish. Still, there may be some obstacles ahead. Repurposing old coalfields for solar power sounds nice on paper, but someone else might have gotten there first.
Agricultural restoration of former mining sites is a longstanding practice in both Indiana and Illinois. Presumably RWE and Peabody have factored that into their site selection. Their press statement notes that the solar projects will “maintain existing agricultural lands,” which is rather vague. If you have any thoughts about that, drop us a note in the comment thread.
If you’re guessing agrivoltaics is in the mix, that’s a pretty good guess. RWE is front and center in the agrivoltaic movement, which deploys solar arrays designed to accommodate farming. The company has established a 3.2 megawatt agrivoltaic demonstration farm in Germany, located at the edge of an open pit mine. The five-year research project is aimed at developing best practices for balancing solar power with crop productivity.
“The need for large areas of land for further expanding solar electricity generation makes the symbiosis of agriculture and photovoltaics a particularly valuable proposition,” explains Katja Wünschel, the CEO of RWE Renewables Europe & Australia (see more agrivoltaics background here).
What About The Data Centers?
As for data center demand, alternatives to coal have already emerged. Data centers were already deploying solar power and other renewables more than 10 years ago, with energy storage making an appearance as well. Fuel cells and green hydrogen are beginning to crop up, too.
Then there’s nuclear energy, which is making a comeback in the form of new, downsized systems called small modular reactors. Google among those aiming for a head start. On October 14, Google announced an SMR deal with the company Kairos Power, billing it as the first of its kind in the world.
“The initial phase of work is intended to bring Kairos Power’s first SMR online quickly and safely by 2030, followed by additional reactor deployments through 2035,” Google stated.
“Overall, this deal will enable up to 500 MW of new 24/7 carbon-free power to U.S. electricity grids and help more communities benefit from clean and affordable nuclear power,” they added.
If all goes according to plan, that is. Natural gas stakeholders are also angling for a piece of the data center pie, ready to pick up the ball if small modular reactors drop it.
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