New Energy/AI Ecosystem Takes Shape in Utah

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Written by John Egan for IIR News Intelligence (Sugar Land, Texas)

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Summary

A new energy ecosystem is taking shape in Utah, and a data center hyperscaler plans a multibillion-dollar investment to take advantage of the existing energy infrastructure.

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New Energy Ecosystem Taking Shape in Utah

Three hundred miles northeast of Las Vegas, in west-central Utah, energy companies, an equipment supplier and a data center developer have placed multibillion-dollar bets on the future of the energy industry and artificial intelligence (AI). Ground zero for this future-focused activity is Millard County, Utah, population about 13,000.

For 40 years since 1986, the two-unit Intermountain Power Plant burned Utah coal to generate up to 1,800 megawatts (MW) of electricity. Most of that power went to southern California, where a group of municipal utilities, led by the Los Angeles Department of Water & Power (LADWP), happily used it to power homes, businesses and streetlights. But a California decarbonization law, Assembly Bill 32, enacted in 2006, prohibited the state's utilities from purchasing out-of-state coal-fired power. Existing contracts for coal generation were allowed to continue, but they could not be renewed.

So, the owners and off-takers of that power plant developed a plan to build two gas-powered units on the site of the coal units, which were mothballed last Thanksgiving. The new units, costing about $1.2 billion and totaling about 840 MW of capacity, will use an expanded transmission line to get power to Southern California. The new units also can burn a mix of up to 30% hydrogen. They began commercial operation last year.

In an interview with Industrial Info, John Ward, a spokesperson for the Intermountain Power Project (Delta, Utah), said the turbine manufacturer, Mitsubishi, claimed the new gas units could burn 100% hydrogen in the future, providing the fuel nozzles were replaced at a relatively small cost.

Where will the hydrogen come from? Right across the street from the power station, a $900 million hydrogen storage project is going through final steps to commercial operation. The American Clean Energy Storage (ACES) project in Delta, Utah, will be built by Mitsubishi and Chevron Corporation (Houston), with the help of a $504 million loan guarantee from the Biden administration's Department of Energy.

The power station sits atop a salt dome that is well-suited for storing hydrogen, Ward said. He said the assumption is that hydrogen would be generated from renewable power using electrolyzers. Because the energy-gobbling electrolyzers consume a lot of electricity, he added, "if the ACES-Delta project didn't use renewable energy, that would change the economics."

Ward said the hydrogen storage project would be capable of making up to 100 metric tons of hydrogen daily by splitting water atoms. It is expected that the project will be able to store up to 300 gigawatt-hours (GWh) of hydrogen, one of the largest in the world, he estimated. By producing "green" hydrogen without fossil-fuel electricity, the off-takers in California can continue to say they are pursuing decarbonization.

In a December 4 statement, Los Angeles Mayor Karen Bass said this about switching the Intermountain Power Plant (IPP) from coal to gas: "This is a defining moment for the City of Los Angeles. L.A.'s coal divestment is not just about discontinuing the use of coal to power our city--it's about building a clean energy economy that benefits every Angeleno. This milestone will further accelerate our transition to 100% clean energy by 2035. With major investments in solar, wind and EV-charging infrastructure, record amounts of stormwater captured, and bold initiatives in place to reduce carbon emissions citywide, we are taking action to build a cleaner, greener city that will benefit Angelenos for generations to come."

Other Developers Interested in Buying Site

Other developers may be interested in gaining a foothold in Millard County, Utah, site of the IPP. Ward said that a state request for information last year drew about 14 responses, including one respondent that wants to build nuclear generation and another that was advancing coal generation. The state asked about companies' interest in buying the mothballed coal-fired units.

The coal units are "laid up and in operable condition," Ward said. He didn't say how long it might take for them to be reactivated. Right now, there are no plans to decommission and demolish the IPP's two coal units, Ward told Industrial Info.

Last year, Utah lawmakers passed a law that required one of the two coal units to remain connected to the switchyard, in case there was a quick need for its generation. The other coal-burning unit has been disconnected from the switchyard.

It is not clear what steps the state may take in response to the expressions of interest, or when. Utah Governor Spencer Cox has expressed an interest in next-generation nuclear power as part of his preference for an "all of the above" energy strategy.

Ward said the state legislators may want to weigh in with their own ideas when the legislature convenes for its 45-day session January 2.

Data Center Hyperscaler Eyes Huge Utah Campus

The local availability of electricity generation, transmission lines and hydrogen storage has drawn the attention of one Utah-based data center hyperscaler. A unit of Fibernet Corporation (Oren, Utah) has proposed investing up to $23.5 billion to build the Delta Gigasite in Delta, Utah, in Millard County, southeast of the power plant. The proposed campus would be one of the world's largest, with 27 buildings totaling 20 million square feet of data center capacity at full buildout. Electric demand is estimated at 2 gigawatts (GW), expandable to 10 GW. Up to 500 MW of battery energy storage also is part of the plan.

Local news reports have said that if the full project is realized, the 10 GW of power will come from the following sources: 1.8 GW of electricity from the IPP, 6 GW from solar and 2 GW from natural gas. Other potential sources of electricity could include geothermal, wind and nuclear energy.

That massive data center project is expected to begin construction in stages, with the first building scheduled to begin construction this May and coming online in April 2027. Two more buildings are scheduled to begin construction this year, with three more beginning construction in 2027.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Plant and Project databases can learn more about the Delta Gigasite--including capacities, investment values and necessary equipment--from a detailed list of project reports.

Reflecting on IPP's role in a rapidly changing business environment, Ward said, "We're out of coal, but not out of fossil fuels." Depending on how the future unfolds, it may not have completely turned its back on coal, either.

Key Takeaways

• The Intermountain Power Project in Delta, Utah, mothballed its two coal-fired units totaling 1,799 MW last Thanksgiving.
• Two replacement gas-fired generators totaling 840 MW began operating in 2025. Those units can burn up to 30% hydrogen right away.
• There are said to be over a dozen potential buyers for the coal units.
• Construction of a large hydrogen storage project near the IPP site is nearly complete.
• A data center hyperscaler has plans to invest over $20 billion to build one of the world's largest data center campuses near the power station.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR News Intelligence) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 250,000 current and future projects worth $30.2 trillion (USD).