Denham Capital and Babcock & Wilcox Collaborate to Transform Coal Plants into Natural Gas Facilities for Data Centers

In a significant move towards modern energy solutions, Babcock & Wilcox (B&W) has joined forces with Denham Capital to repurpose former coal-fired power plants into natural gas facilities designed to power data centers in the United States and Europe. This collaboration capitalizes on Denham's extensive experience in developing large-scale power plants and B&W's technical expertise in converting coal plants to natural gas. As artificial intelligence drives a surge in energy consumption, the partnership posits natural gas as a scalable and cost-effective alternative to meet the escalating demands of data center growth.

The energy landscape is witnessing an unprecedented rush for power generation, reminiscent of trends not seen in nearly two decades. Justin DeAngelis, Denham Capital's global head of sustainable infrastructure, emphasizes the urgency of addressing this demand, stating that the partnership is a valuable tool to meet market needs. B&W will lead the engineering and technology aspects of the projects, while Denham will oversee development, financing, and market strategies.

Denham is preparing to unveil a dedicated portfolio company focused on these initiatives, though specific project timelines remain unspecified. Kenneth Young, B&W's chairman and CEO, notes that this strategic alliance brings together seasoned teams capable of swiftly identifying opportunities to transform underutilized coal plants into reliable power sources for large-scale data centers.

While natural gas is significantly cleaner than coal, producing roughly half the carbon dioxide emissions per energy unit, it still poses environmental challenges due to methane leaks and emissions. Thus, despite being a preferable option compared to coal, it falls short when juxtaposed with renewable energy sources.

This partnership marks B&W's second venture aimed at the data center sector in recent months, following an August announcement regarding a hydrogen production facility and a 1GW data center campus in West Virginia. The trend of converting decommissioned coal plants into natural gas facilities is gaining traction, with various utilities already undertaking similar projects. For instance, Dominion Energy has transformed several old coal plants into natural gas-powered facilities, and recent efforts by Homer City Redevelopment and Kiewit aim to convert a 2GW coal plant in Pennsylvania into a substantial natural gas-powered data center campus.