Hallador seeks to bring data centers to power plant site
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Terre Haute-based Hallador Energy Co. is looking to bring more development to its Merom Generating Station in Sullivan County. The company is looking to market the site to data centers, artificial intelligence providers, and other high-density power users.
Hallador recently signed a memorandum of understanding with Bloomington-based Hoosier Energy and WIN Energy REMC, which will allow the company to attract the kinds of businesses it is looking for.
In the company’s quarterly earnings call with investors, CEO Brent Bilsland said the effort could create benefits for the Merom plant.
“We believe leveraging our plant to help supply these large users of energy should allow us to operate the plant more efficiently in a volatile power environment and generate increased margins at or above what we can achieve in the traditional wholesale market,” Bilsland said.
Bilsland said Hallador plans to begin a request for proposals process as early as next month to find potential businesses who would want to locate at the Merom site, and they’ve already received interest from prospective companies.
“If we succeed in attracting high powered demand customer through this structure, it moves Hallador up the electricity value chain, providing additional margin and stability to our earnings for years to come,” he said.
It’s too early to tell how quickly a new data center or other business could locate at the site, Bilsland said, noting that some customers have already said they could begin construction within three months. He said that timeline would be too aggressive, but he is excited at the prospects.
“Could we see something as early as next year? Possibly, but we’re not really far enough along in those conversations to give any guidance,” he said.
The MOU with Hoosier Energy is a continuation of a longstanding partnership between the utility and Hallador, which acquired the two-unit, 1-gigawatt Merom Generation Station from Hoosier Energy in 2022 for an undisclosed price.
The coal-fired plant operates using coal mined from Hallador’s Sunrise Coal Division, and Hoosier Energy continues to purchase energy generated from the Merom plant as part of a Power Purchase Agreement.
Bilsland said the agreement is key to being able to supply power to potential data centers at the Merom site.
“We are only allowed to sell wholesale power, and when you start attracting customers for data centers and whatnot, that is industrial power,” he said. “That technically has to be sold through a structure that involves Hoosier and their distribution cooperative, WIN REMC. I think we have a real opportunity to not only create value for Hallador but create value for Hoosier, WIN REMC and their customers.”
Hallador did not provide a timeline for when the RFP process would be completed.
The effort was announced as part of Hallador’s full-year earnings report this week. The company reported record net income of $44.8 million in 2023, up from $18.1 million the previous year.
Hallador is also in the midst of idling two of its mines as part of a restructuring of its Sunrise Coal Division. The affected mines are the Freelandville Center Pit in Knox County and the Prosperity Mine in Pike County, and 110 workers are being laid off as a result beginning next month.
“While this was a difficult decision on a personal level, it was the right thing to do for the company,” Bilsland said. “And we believe that it will improve our operational efficiency relatively quickly.”
Bilsland said despite the difficulty of idling the mines and conducting the layoffs, the company is bullish for the future.
“We believe that our recent restructuring in our coal division, agreements like the MOU and the momentum that we are seeing in forward power sales will all continue to improve the long-term outlook for the company.”