Google and Amazon data centers in Northwestern Indiana, if they come online as planned, will do so thanks in part to 500 megawatts of capacity from Hallador Energy’s coal-fired Merom generating station.
According to its latest regulatory filings, Hallador inked a 12-year, $1-billion deal this spring with the Northern Indiana Public Service Company to provide half a gigawatt of capacity into MISO starting in 2028. At an estimated $450 per megawatt-day, the contract represents a massive premium for Merom’s firm capacity at a time when Indiana (and the rest of the country) is grappling with massive inclement data center load.
While it won’t power the data centers directly, the coal capacity will contribute to a portfolio of resources NIPSCO will use to serve data center customers like Amazon and Google, which it announced as a customer in April, as well as future contracts.
This pooled assets approach to data center generation is part of the utility’s strategy for ring-fencing the costs of serving an expected 8.6 GW of AI load growth. Under a structure approved by the Indiana Utility Regulatory Commission last year, NIPSCO created a subsidiary specifically for building and owning generation for data centers. That separate company, called NIPSCO Generation LLC, or GenCo, is responsible for sourcing and selling power to its parent via power purchase agreements.
NIPSCO in turn serves data centers under special contracts negotiated on a project-by-project basis. In the case of the Merom plant, GenCo is leveraging old infrastructure rather than building new — thereby getting the capacity more quickly.
That structure means that, in the event that the data center load fails to materialize, it’s not on the broader NIPSCO balance sheet, but rather with a separate, competitive entity, explained Caroline Golin, former head of global energy at Google and chief growth and policy officer at NRG. “I’m actually a fan of these types of structures if done well, where…the risk and the rewards are held by the company, not by the rate payer,” she said.
According to the latest investor presentation from NIPSCO’s parent company NiSource, the 500 MW of coal capacity will join 342 MW of battery capacity, spread across several projects, as “pool resource assets.” Separate from the pool, GenCo is building and will own a 3-GW package of generation dedicated specifically to Amazon, made up of 2.6-GW combined-cycle gas plants and a 400-MW battery.
A bumpy road for Merom
The deal with NIPSCO — which the investment bank Jeffries pegs at $450 per MWd — accounts for around two-thirds of the Merom plant’s total operating capacity, boosting the plant’s value through the next decade. The pricing is “remarkably strong,” the analysts noted, more than double the approximately $200-per-MWd capacity prices recently seen in the PJM market. And, they added, it will add around $30 million in annual free cash flow starting in 2030.
But the plant has had a hard time with data center load in the past. According to the company’s SEC filings in early 2025, Hallador had signed an agreement with a “leading global data center developer” that would have spoken for a “majority” of the company’s energy and capacity for at least the next decade. By May, however, the deal had fallen through, causing Hallador’s stock to drop nearly 20%.
Merom is not among the Indiana coal plants that the Department of Energy has ordered to remain open past planned retirement dates. That said, it has been brought back from the dead to meet data center load nonetheless. It was slated to retire in 2023; its then-owner, Hoosier Energy, said shuttering the plant would save it $700 million over two decades as it transitioned toward a portfolio of renewables and storage.
Hallador stepped in to purchase the plant in 2022, assuming decommissioning costs and environmental liabilities. Under the agreement, the pair also delayed the start of an existing renewable energy PPA, including 150 MW of solar and 50 MW of energy storage, until the plant eventually retires.
Thanks to the recent deal with GenCo, that retirement is now unlikely to be before 2040, potentially locking in decades more of high emissions. The assurance of the long-term deal, Jeffries analysts added, also means Hallador now has the improved liquidity and credit needed to pursue a gas extension at the site.
But local backlash against new data centers — including on the grounds that they could contribute to a longer-life for fossil generation — is on the rise in Indiana, including in NIPSCO territory.
In the last few months, Project Shirley, a proposed 500-MW data center that NIPSCO would in theory serve via GenCo, has faced mounting opposition from local residents, who worry about the physical and cultural impact of the project, and the fact that the agreements between NIPSCO and data center developers are private.
In the case of Merom, Jeffries says contracting with regulated utilities is the “more durable path forward” for power producers, compared to direct deals with data center developers. (That said, many developers are betting on the latter as well.) Utility-backed PPAs, the analysts said, are necessary to underwrite the economics of new generation projects.
Google and Amazon didn’t immediately respond to a request for comment.
