Coal power energy producer Hallador Energy has signed a non-binding term sheet with an unnamed data center developer to supply it with energy over a prolonged period.

The partnership is expected to extend for over a decade. Hallador is finalizing the agreement and the relevant utilities to facilitate energy delivery.

In its Q3 earnings call, the company cited the surge in demand from data centers as a “meaningful opportunity” for the power producer, presenting it with a chance to transform its long-term financial profile.

“We are encouraged by the progress with this partner and the strong interest we continue to see from other potential counterparties in our energy and capacity offerings,” said Brent Bilsland, CEO of Hallador.

Hallador is an energy company operating in Indiana. The company has two segments: coal operations and electricity generation. Its electric operations facilities include Merom Power Plant, a two-unit, 1080MW-rated coal-fired power plant.

If signed, the deal would mark a turning point in energy procurement for data centers in the US. Despite most operators prioritizing carbon-free energy supply deals, there has been an increasing interest in fossil fuel agreements for data centers due to their certainty of supply and lack of intermittency compared to renewable energy.

The majority of deals have been struck with natural gas providers. For example, this week, GPU cloud provider Sharon AI announced a deal with New Era Helium to form a joint venture to design, develop, and operate a 90MW natural gas-powered data center in New Mexico.

However, some plans for similar projects have been criticized. Earlier this month, Balico scaled back plans for a gas-powered data center in Virginia following concerns raised by local residents.