This old Pennsylvania coal town could get a reboot from AI
As the September evening inched along, the line of residents waiting their turn for the microphone held steady. Filing down the auditorium aisles at the Indiana University of Pennsylvania, they were armed with questions about a new gas plant slated for their community.
Sitting quietly in the audience was John Dudash. For decades, he’s lived in Homer City, a southwestern Pennsylvania town that was once home to the largest coal-fired power plant in the state. The plant, which shares its name with the town, closed nearly three years ago after years of financial distress.
Dudash, 89, has lived in the shadow of its smokestacks—said to be the tallest in the country before they were demolished—for much of his life. At its peak, the Homer City power plant employed hundreds of people and could deploy about 2 gigawatts of energy, enough to power 2 million homes.
Join our email list to get the stories that mainstream news is overlooking.
Sign up for Capital & Main’s newsletter.
It was also a major source of air pollution, spewing sulfur dioxide and mercury, both of which pose serious health risks. Today, Dudash wonders if the pollution might have exacerbated the lung issues that claimed his wife’s life six years ago.
The proposed gas plant, expected to be up and running in 2027, will replace the old coal-fired power station, but with more than double the energy output—4.5 gigawatts of energy. The new plant also will have the potential to emit 17.5 million tons of planet-heating greenhouse gasses per year, the equivalent of putting millions of cars on the road.
And it will serve a new purpose: Rather than primarily sending electrons to the regional grid to power homes or businesses, the new power plant will exist mainly to feed data centers planned on the site.
As the hearing wore on that September night, Dudash, a conservationist, did not stand to speak; instead, he sat quietly, taking mental notes. The next morning, he emailed two staffers at the Pennsylvania Department of Environmental Protection.
“First of all, the project will not be stopped,” he began, with resignation. He went on to offer a few caveats—among them, advice about air monitoring.
His letter reached the agency alongside more than 550 comments on a key air permit for the proposed plant, a testament to the project’s complexity. After the permit was approved November 18, Dudash’s prediction began to look remarkably accurate—though the Homer City plant still has about a dozen additional permits awaiting approval before the project can be completed, including one that would impact several acres of wetlands and hundreds of feet of a local stream.
Though it is among many energy sites popping up to power the artificial intelligence boom across Pennsylvania, the Homer City facility is unique for its size, its advertised economic potential—the owners have promised the project will generate more than 10,000 construction-related jobs—and for its likely environmental impact. It has earned the backing of President Donald Trump, who called it “the largest plant of its kind in the world,” a distinction its owners could not verify. There was a buzz in town in late October when Jared Kushner, Trump’s son-in-law, visited, though it was unclear what drew him to Homer City.
“I don’t really trust the people who are coming in to build and run the place,” Dudash said. “I do not agree with the artificial intelligence portion of it.”
“They’re going to have to sacrifice the environment for these jobs,” he added. “In Appalachia, we’ve been doing that for years.”
When the old plant sputtered to a close in 2023, it left the surrounding community—which was built on the local abundance of coal—in search of an economic lifeline. Now the data center boom sweeping the country brings promise of such a rebirth for communities like Homer City, though this promise is one that some experts say may be less than billed. And, it comes with risks.
The new power plant will be much larger than its predecessor and is permitted to emit more than twice as much of some pollutants as its predecessor did. The data center, or centers, it powers would also consume a tremendous amount of water—perhaps more than its host townships can spare, some fear.
Artificial intelligence requires vast amounts of electricity and has the potential to offer a lifeline to the fossil fuel industry. Though some in the community are sanguine about the promise of jobs, experts say the reality for many living around data centers may fall short. Some are left wondering exactly who the new plant is for—them or some faraway tech companies.
The Homer City project is far from alone in its emergence: The nonprofit Fractracker has identified 39 planned data centers in the works across Pennsylvania. Tech companies like Microsoft and Amazon are moving in, alongside others intrigued by the state’s rich legacy of power production, deep natural gas reserves and generous subsidies. In July, Republican Senator Dave McCormick, from eastern Pennsylvania, held a conference in Pittsburgh during which companies announced more than $90 billion in data center investments and related energy infrastructure.
This tech boom largely has bipartisan support, including from Governor Josh Shapiro, a Democrat who said at a June press conference that he is committed to “ensuring the future of AI runs right through Pennsylvania.” Legislators in Harrisburg, meanwhile, are introducing bills that would both spur the burgeoning industry and give it guardrails.
The extent to which the Homer City facility’s owners have lobbied for supportive legislation is not clear. The company’s lobbying registration with the Pennsylvania Department of State goes back only to January 2025. It has, however, spent at the local level. In November, for instance, the company gave a community nonprofit $25,000 for a holiday food drive. It also urged state utility regulators, who are drafting a policy on data centers, to issue one that does not saddle data centers with costs that might “push” them out of state.
Meanwhile, communities are pushing back and the environmental nonprofit Food & Water Watch recently called for a nationwide moratorium on new data center construction. More than 200 other groups later joined them in making such a plea to Congress. On the ground in Homer City, a coalition of neighbors have formed Concerned Residents of Western Pennsylvania to oppose the project.
The Homer City proposal is the brainchild of the same private equity owners that closed the plant in 2023—after years of financial difficulty and two bankruptcies. Two firms own close to 90% of the plant, with New York City-based Knighthead Capital Management holding the vast majority of that. It’s part of a wave of private equity investment in the data center industry. In March, the owners, operating under an LLC called Homer City Redevelopment, toppled the plant’s signature smokestacks. A few weeks later, they announced that the plant would reopen with a data center customer, or suite of customers, to be announced as soon as 2026.
Critics fear the new plant will require a lot more water than its predecessor. The supercomputers that data centers house whirr away around the clock, and need to be routinely cooled down. Some data center companies have introduced recycled water into their systems. Homer City Redevelopment has not said if their data center clients will be among them.
In 2014, U.S. data centers used 21.2 billion liters of water, enough to fill nearly 9,000 Olympic-size swimming pools. That number tripled by 2023, with the vast majority of the water consumed by “hyperscale,” or large, facilities like Homer City. In states like Colorado, where water use has, for decades, been meticulously planned and negotiated, data centers are threatening to strain such finely tuned systems.
Dudash, the longtime Homer City resident, is concerned about a similar fate. “I’m not sure how they’re going to handle the water,” he told Capital & Main after the September hearing.
The power plant has, since 1968, been allotted an uncapped amount of water from Two Lick Reservoir, a 5-billion-gallon, dammed-off portion of a creek that the plant’s former owners built explicitly for its use.
The power plant shares the water with a utility that serves two local communities—Indiana borough and the broader White Township—as part of a 1988 drought management plan to prevent and respond to catastrophic weather conditions. The borough of Homer City gets its water from Yellow Creek, a tributary of Two Lick Creek, which serves the reservoir and picks up the slack in the event of a drought.
“Should the Two Lick Creek Reservoir be emptied, [the water utility] would not be able to provide sufficient water to protect public health and safety in their service area,” the drought management plan reads.
In 1985, the delicate system between Two Lick and Yellow Creek was strained when the then-Homer City plant drew so much water from the reservoir that it led to a drought. “Had a significant rainfall not occurred . . . the reservoir may have faced total depletion,” the drought management plan reads.
A report from the Pennsylvania Department of Environmental Protection shows that the water utility drawing from Two Lick has, in recent years, routinely used nearly half its allotted amount. But critics fear that allocation could be at risk once a data center opens and starts drawing water.
Robin Gorman, a spokesperson for Homer City Redevelopment, told Capital & Main that it plans to leave cooling and water-use decisions to its data center clients, making it unclear how much water will be needed to keep all the computers running, or where that water would come from.
Rob Nymick, Homer City’s former borough manager, who serves as manager of the Central Indiana County Water Authority, told Capital & Main that he is confident local municipalities can share water resources with the planned gas plant. But the data centers could be a different story.
“I do know that data centers do require a tremendous amount of water,” Nymick said. “That’s something we probably cannot provide.”
Nymick said that community officials are operating with “limited knowledge,” and that during the handful of meetings they have held with Homer City Redevelopment, “The only thing that they wanted to discuss is the actual power plant.”
Eric Barker, who grew up in Homer City, attended the September hearing with restrained optimism. “The power plant was a source of pride and is a source of pride for the community,” he said. “There’s not too many large employers in Indiana County,” he added.
But he found little comfort at the September hearing.
The Department of Environmental Protection “seemed woefully, woefully, comically underprepared,” Barker said, citing a response he received to a question about the types of pollutants that would increase under the new Homer City proposal, compared to what was emitted by the old plant. Barker was told the agency would look into it and get back to him.
“Some questions and concerns were raised at the public meeting regarding the plan approval about matters beyond the limited scope of the meeting,” said Pennsylvania Department of Environmental Protection spokesperson Tom Decker in a statement. “Interested parties are encouraged to look to the DEP’s extensive website, including its community page dedicated to the Homer City project, for resources addressing such questions and concerns.”
Despite the questions that followed, the department, on the whole, signaled satisfaction with the Homer City plant’s air permit application at the hearing. “What’s being proposed is what we consider state-of-the-art emission controls,” said Dave Balog, environmental engineering manager at the department’s northwest regional office.
Environmental nonprofits Citizens for Pennsylvania’s Future, Clean Air Council, the Sierra Club and Earthjustice countered in a 44-page comment on a draft of the key air permit that the application does not incorporate the best tools for mitigating pollutants such as ammonia, which is known to cause respiratory issues and other health risks. The Department of Environmental Protection agreed with Homer City Redevelopment’s analyses of its best available technology, and the permit was granted.
* * *
As Homer City’s smokestacks imploded and fell to the ground last March, leaving only a gray cloud, Dudash wondered what particulates might be in the dusty mix. While there were rumors in town that asbestos might be among them, the Department of Environmental Protection told Capital & Main that the site was inspected for the substance before it was demolished and none was found.
Still, coal dust, fly ash, and silica particulates are all possible during such implosions, an agency representative said. In the months since, residents have complained of repeated blasts from the site rattling their houses. As of January, the blasts occurred daily.
But the particulates that drift from the old plant during the blasts may pale in comparison to the carbon dioxide emissions the new power plant is predicted to release. The key air permit the Department of Environmental Protection issued to the facility allows it to release up to 17.5 million tons of the heat-trapping gas, like carbon dioxide, per year—the equivalent of putting 3.6 million gas-powered vehicles on the road annually. In 2010, according to federal data, the plant emitted just over 11 million tons of greenhouse gasses. In 2023, when it was operating at a fraction of its capacity, it emitted 1.3 million.
In their comment to regulators, the nonprofit environmental groups said that the carbon dioxide emissions would be triple those of any polluting facility in the state, representing 6% of Pennsylvania’s total emissions. The new plant will emit sulfur oxides and nitrogen oxides, two classes of respiratory irritants, but at rates lower than the old plant. The nonprofit Clean Air Council condemned regulators’ issuance of the air permit, calling it a “death sentence.” Along with PennFuture and the Sierra Club, the Council appealed the permit in December.
The owners said the emissions from the new plant will result in a 35% to 40% reduction in carbon dioxide compared to the old plant, but the calculation does not account for the new plant’s larger size. Instead, it is per-megawatt hour, meaning per unit of energy generated. Natural gas is less emissions-intensive than coal when burned, but because the Homer City plant will generate more than double the energy of its predecessor, its overall emissions profile is expected to be higher.
As the state grapples with extreme weather events such as flooding due to global warming, locking in carbon emissions is the wrong direction to go, the environmental nonprofits argue. On an annual basis, the plant will be permitted to emit hundreds of tons of respiratory irritants like particulate matter and nitrogen oxides, and dozens of tons of formaldehyde, a carcinogen. It will also emit health-harming compounds like toluene, xylene, and ethylbenzene.
Additional emissions are likely to come from the natural gas drilling that will be required to power the site.
In 2024, Nymick told Capital & Main that the borough was struggling to find a new economic engine. “We’re fighting for our survival,” he said at the time. Data center industry advocates contend that the data center gold rush will be a boon for communities like Homer City, where boarded-up storefronts line the main street.
“For every one job in a data center, six jobs are supported elsewhere in the economy,” said Dan Diorio, vice president of state policy for the Data Center Coalition, an industry trade group, at a hearing in the state Capitol in October.
Sean O’Leary, senior researcher at the nonprofit think tank the Ohio River Valley Institute, said the reality isn’t that rosy. The average data center employs as few as 10 people and as many as 110, per his own calculations based in part on data from the Bureau of Labor Statistics. The computers inside them can generally run on their own with limited maintenance.
Even in a rural county like Indiana, O’Leary said, “One hundred is a rounding error. It just doesn’t matter. It doesn’t matter if they’re paid $200,000 a year. It’s not enough to make a significant change in the status of the local economy.”
In a recent report on the data center boom in natural gas economies in Appalachia, O’Leary said gas-powered data centers represent the combination of “three non-labor-intensive industries”—fracking, power plants and data centers. “Stacking [them] on top of each other does not alter the underlying dynamic which ties them together.”
Ron Airhart, a former coal miner and executive assistant to the secretary-treasurer of the United Mine Workers of America, is more optimistic about the economic potential of the new Homer City facility.
Still, he concedes that it will never be what the old plant was. “Yes, building a gas fired power plant is going to create a lot of construction jobs, there’s no doubt about that,” he said. “But once it’s done, how many actual employees are you going to have working there?”
He quickly added, “But, I’m glad they are doing something with the old power plant there.”
Gorman told Capital & Main that Homer City Redevelopment and its construction partner, Kiewit, are planning to hire from local unions and building trades. They foresee 10,000 construction jobs. They also anticipate the site will create 1,000 “direct and indirect” permanent jobs, including those hired at the facility itself and those brought aboard for supportive positions, such as suppliers.
“From start to finish, the Homer City Energy Campus will be developed in partnership with skilled local craftsmen and will bring quality, good-paying jobs back to the Homer City community,” Gorman said.
O’Leary said the jobs numbers such as those projected by the Data Center Coalition are inflated, similar to the employment projections made before the fracking boom in rural Appalachia. He said such projections are a detriment to communities, in part because taxpayers shoulder the cost of subsidies to attract the industry to the state, such as a sales and use tax exemption for data centers that Pennsylvania codified in 2021. Shapiro has estimated that the credit will expand to about $50 million per year for the next five years.
Local residents are also burdened with rising utility bills. The surging demand for electricity is straining the region’s power supplies, increasing what utilities pay for electricity. New power plants coming onto the grid must install transmission equipment, the costs of which they share with consumers. These economic factors, in sum, could outweigh the benefits of the new jobs the data center creates, O’Leary said.
Earlier this year, the grid operator for the region that encompasses Pennsylvania, PJM, saw electricity prices surge by roughly 1,000% from two years ago. Some of that cost is expected to be passed on to customers.
“We have a problem, and that problem is real, and it is exponential electricity load growth causing exponential price increases for consumers,” said Patrick Cicero, former consumer advocate for the state of Pennsylvania and now an attorney for the Pennsylvania Utility Law Project, at the October hearing in Harrisburg.
“In the context of Grandma versus Google,” Cicero said, referring to older residents faced with high bills, “Grandma should win every day. That should be the policy statement of the Commonwealth of Pennsylvania.”
Federal and state lawmakers are still determining how and whether to regulate the additional costs that data centers pass onto consumers, including for fees associated with transmission throughout the grid. A bill that would create such a process while establishing renewable energy mandates for data centers is now being weighed by Pennsylvania representatives.
Dennis Wamsted, energy analyst at the Institute for Energy Economics and Financial Analysis, predicts such costs add complications for data centers, and has argued that their demand as a whole is overblown. Supply chain delays spurred by surging demand for turbines, including those that Homer City will be using, could also create additional costs and lag times, he said.
“If there is an AI bubble and it bursts,” he said, “you would have built all this capacity that wasn’t needed.”
Homer City’s owners said the plant is better positioned than others in the industry since it isn’t starting from scratch.
“Much of the critical infrastructure for the project is already in place from the legacy Homer City coal plant, including transmission lines connected to the PJM and NYISO power grids, substations and water access,” Gorman, the spokesperson, said.
Communities on the front lines of these projects would be the first hurt by a project that fails to materialize.
But in Homer City, it’s clear that there’s an appetite for the promise of a new, job-producing industry, regardless of hurdles.
At the September hearing, many in the crowd wore neon shirts with union logos—a signal of the region’s fierce pride in its industrial past, and deep thirst for an economic boon. After an evening peppered with skepticism over the plant, Shawn Steffee, a business agent at the International Brotherhood of Boilermakers, stepped to the microphone.
“Everybody speaking about jobs,” he cried, “there will be jobs, and there will be local jobs.”
As he walked away, the room filled with applause—the loudest of the night.
—By Audrey Carleton