In Harrisburg, Pennsylvania, the escalating demand for electricity driven by technology companies engaged in the artificial intelligence sector is reshaping predictions for natural gas-fired power in the United States. This change is causing utilities to reconsider natural gas as a primary power source, which runs counter to the expectations of many scientists and climate activists working towards combating climate change.
Many tech companies across the nation are acquiring real estate and seeking to power their energy-intensive operations. While some companies are opting for greener energy projects such as solar, wind, geothermal, or battery storage, many industry leaders are gravitating towards natural gas. They cite its low cost and reliability, which hints that it might play a larger and more prolonged role in energy production than previously anticipated. Corianna Mah, an analyst from Enverus, conveyed that natural gas is expanding more rapidly now than before.
Previously, industry insiders had speculated there would be minimal construction of new gas plants, expecting a gradual shift to renewable energy sources such as wind, solar, geothermal, and potentially next-generation nuclear power. These sources do not produce carbon dioxide emissions, a key factor in global warming. Globally, many countries are on a mission to reduce emissions significantly by 2050 to avert severe climate impacts. In the United States, the electric power sector ranks as the second-largest greenhouse gas emitter, according to government data. Constructing new natural gas plants, each designed to operate for decades, is a step back for climate initiatives, notes John Quigley from the University of Pennsylvania’s Kleinman Center for Energy Policy.
Methane, a potent greenhouse gas, is released unburned from natural gas during extraction. Environmental advocates like Quigley insist there’s ample solar, wind, and battery storage projects poised to meet growing electricity needs. Yet, utilities seem reluctant to abandon natural gas. Projections from Enverus anticipate approximately 46 gigawatts of gas-fired power coming online over the next five years, surpassing the 39 gigawatts added over the past five years. Noteworthy announcements from last year include projects like Evergy’s two 705-megawatt plants in Kansas and Entergy’s sizable 2,300-megawatt plant supporting Meta’s data center in Louisiana. Other developments are underway in Texas, Mississippi, Tennessee, North Carolina, and Georgia.
Calpine is exploring new gas-fired capacities in Pennsylvania and Ohio. In Pennsylvania, the old Homer City coal plant is being converted into a significant gas-powered station, which received a $5 million state grant for this transformation. The clamor for electricity, driven by the AI boom and ongoing cryptomining, combines with the broader societal move towards electrification and a bipartisan push for domestic manufacturing. This demand aligns with the closure of coal and aging nuclear plants unable to compete with cheaper natural gas, solar, and wind options.
Gas pipeline companies are keenly anticipating this new demand surge, reporting significant interest in expanding their networks. In Texas’s Barnett Shale, BKV’s CEO, Chris Kalnin, observes a trend of gas plants being constructed next to data centers within the Dallas area’s vibrant data hub. Competition among data center developers is intensifying as they scramble to secure power, Kalnin says, emphasizing the need for rapid and reliable energy sources.
Rob Jennings from the American Petroleum Institute highlights how the spike in actual and projected electricity demand places a premium on swiftly deployed, affordable, and reliable power sources like natural gas over others like solar and wind. According to industry officials, delivering clean, dependable, and affordable electricity remains a priority. Some new gas plants are replacing higher-polluting coal-fired plants, while others designed for specific scenarios come equipped with advanced technology like carbon capture or run on a hydrogen blend.
Support for gas-fired power runs high at the political level. In a recent address at the World Economic Forum, in Davos, a commitment was made to issue emergency declarations to bolster the construction of coal and gas plants, aiming to elevate the U.S. as a powerhouse in manufacturing, cryptomining, and Artificial Intelligence. Amanda Levin from the Natural Resources Defense Council advocates for substantial reduction in gas reliance by 2035, aiming for profound climate commitments. Despite this, there are optimistic prospects that not all planned gas plant projects will come to fruition.
Recent advancements from tech firms, such as a cost-effective AI model by a Chinese startup, could alter the trajectory of energy-demanding data center expansions. Meanwhile, analysts argue that electric utilities may overestimate their requirements, counting multiple potential data center sites when firms build only one. Furthermore, with data center operators improving energy efficiency, particularly in cooling servers, the necessity for all the projected gas plants may not materialize.
