Where coal once reigned, Virginia eyes data centres

• Nonprofit envisions energy transformation in SW Virginia
• Proponents try to beat back data centre scepticism
• Region has lost population, income sources

BRISTOL, Virginia - The demise of the coal industry left the U.S. Appalachian region in tatters, with lost jobs, spoiled water and countless miles of abandoned underground mines.

Now entrepreneurs are eyeing the rural region with ambitious visions to rebuild its economy by converting old mines into solar power systems and data centres that could help fuel the increasing power demands of the artificial intelligence boom.

One such project is underway by a non-profit team calling itself Energy DELTA (Discovery, Education, Learning & Technology Accelerator) Lab, which is looking to develop energy sources on roughly 65,000 acres of old coal land in southwest Virginia.

Will Clear and Will Payne, who help manage Energy DELTA Lab, say they imagine building a massive 450-acre Data Center Ridge on top of old mining lands that could be powered and cooled using the billions of gallons of water that naturally replenish below.

Unlike in some neighbouring areas, there is no acid mine drainage, which deposits sulphuric acid and heavy metals from exposed mine rock faces, rendering water unusable, Payne said.

The difference has to do with geology, he said, as Wise County and other area coal fields lack the mineral pyrite, a key culprit in acid mine drainage.

"So the water quality is there. Obviously the cost to use, to circulate this water is low," Payne said.

In support, a handful of localities, including Wise County, have a special tax rate on data centre equipment and resolutions aimed at welcoming regional data centre investments.

Payne acknowledges that their plan could meet with resistance in an area hard-hit by coal's decline.

"Anyone looking at expanding in the region, there is scepticism because there have been so many stories of promises made but not kept," Payne said at Squabble State Hard Cider & Spirits, a cider-making business he and Clear run near the state border with Tennessee.

Appalachia was once the heart of the nation's coal industry, whose decline decimated local communities.

Amid issues of cost, worker health and the fossil fuel's contributions to global warming, coal has been dropping as a top source of U.S. fuel for decades.  

"If you go through coal mining communities, they're ghost towns," said Erin Bates with the United Mine Workers of America, a trade union.

"The number of bankruptcies that have happened in the last three decades have destroyed these communities."

Ambitious vision

Financially, the Data Center Ridge vision is ambitious. Constructing an average-sized data centre facility can cost between $500 million and $2 billion, according to Allianz, a financial services company.

The entrepreneurs hope to prove the feasibility of their idea to Texas-based Energy Transfer, which owns the land in question. The land is managed by Penn Virginia Operating Co.

"They're willing to think about the future, whereas others maybe just don't have the time or don't have the interest," Payne said.

Energy Transfer did not respond to interview requests.  

Other coal mine repurposing projects are seeing success, at least on a local scale.

The Mineral Gap Data Center, also in Wise County, came online in 2023 and touts itself as the first abandoned mine land to be converted to solar in the state.  

In Martin County, Kentucky, a utility-scale solar project on an old mine site that powers some 18,000 homes, came online in December.  

The Nature Conservancy, a nonprofit group, is a partner in a 10 MW solar project in Wise County built on the former Indian Creek Surface Mine. Start of construction is planned for next year.  

The nonprofit is working on a broader conservation effort spanning more than 250,000 acres in Virginia, Kentucky and Tennessee that could include additional solar development, said Brad Kreps, the Conservancy's Clinch Valley Program director.

"Our projects are definitely among the first that are moving forward in central Appalachia," Kreps said.

Public interest test

Building new data centres will need on-site renewable energy to be viable, said Jean Su with the Center for Biological Diversity, a nonprofit group.

However, she questioned building data centres generally.

"That should be up to every single jurisdiction to have that type of public interest test to figure out whether it is actually serving their constituency or not – understanding environmental harms, water issues and drainage," Su said.

Environmental groups criticize the expansion of data centres, which strain power grids and likely require significantly more energy than can be made available.

Some critics like Bates say data centres might not bring the jobs the area desperately needs, but Payne maintains there will be work for local residents.

A typical data centre can add up to 1,500 workers on-site during construction and employ some 50 full-time workers when up and running, according to a 2024 Virginia state report.

Based on average spending by the industry from 2021-2023, overall the data centre industry is estimated to contribute 74,000 jobs, $5.5 billion in labour income and $9.1 billion in GDP to Virginia's economy each year - mostly in the construction phase, the report said.

Those estimates were just over 1 percent of total statewide employment, income and Virginia GDP for those years, it found.

Nationwide, the number of people working in data centres grew from 306,000 to 501,000 between 2016 and 2023, according to the government's Bureau of Labor Statistics.

Meanwhile, the administration of President Donald Trump is aiming to reverse the decline of coal use, largely to help fuel AI systems.

In October, the U.S. Department of Energy announced it would make $100 million available to refurbish and modernise coal-fired power plants.

Bates said the mining community would be pleased with almost any job-creating solution.

"If a battery plant wants to open up, or any kind of plant wants to open up (in) those areas that's going to help the areas thrive and not be so devastated as they currently are, we're absolutely going to welcome it," Bates said.

(Reporting by David Sherfinski; Editing by Anastasia Moloney and Ellen Wulfhorst.)