The US is on the cusp of a natural gas power plant construction boom, as Big Tech turns to fossil fuels to meet the huge electricity needs of the artificial intelligence revolution — putting climate targets in peril.
As many as 80 new gas-fired power plants will be built in the US by 2030, said energy consultancy Enverus, adding 46 gigawatts of capacity — the size of the electricity system in Norway and nearly 20 per cent more than was added in the past five years.
The capacity surge is expected to unfold during the second term of Donald Trump, who has vowed to keep fossil fuels at the centre of the US economy, and signals a reversal of earlier forecasts for natural gas capacity to fall in the next five years.
“Gas is actually growing faster now, and in the medium term, than ever before,” said Corianna Mah, a research analyst at Enverus.
The expansion will imperil Biden administration climate targets, which called for greenhouse gas emissions to fall by 50-52 per cent from 2005 levels by the end of the decade and the grid to be 100 per cent carbon-pollution free by 2035.
“For natural gas to have a role in a decarbonised energy system, its emissions must be mitigated to the maximum extent possible,” said Armond Cohen, executive director at the Clean Air Task Force, an environmental non-profit.
US gas power plants emitted more than 1bn tonnes of carbon dioxide last year, up nearly 4 per cent in a year and the highest on record, according to data from Ember, an energy think-tank.
None of the planned gas plants tracked by Enverus will come equipped with carbon capture systems. While the Biden administration required new facilities to include the technology starting in 2032, Trump is expected to scrap or weaken the rule.
Wood Mackenzie and S&P Global Market Intelligence said US capacity growth in total could increase even more quickly, by 35 per cent and 66 per respectively over five years, compared with the buildout in the previous half decade.
The gas boom comes as the US races against China to develop artificial intelligence and tries to bring back manufacturing lost to Asia in recent decades, sparking a historic surge in demand for cheap electricity that can run uninterrupted.
The US is already the world’s biggest natural gas producer thanks to its huge shale reserves. This helped keep domestic prices for the fuel relatively low, even during Europe’s energy crisis, and has underpinned the boom in seaborne exports.
Although clean energy supplies are also rising across the US — boosted by vast subsidies in the Inflation Reduction Act — developers say intermittent renewables, even with new batteries, are not yet adequate to meet the needs of big consumers.
“Your ability to serve that kind of load reliably is very limited with traditional renewables,” said Matt Bulpitt, vice-president of power development at Entergy, a large utility in the south.
In December, Entergy announced a $3.2bn plan to build three gas plants totalling 2.3GW to serve Meta’s $10bn artificial intelligence data centre, the tech company’s largest. Meta will become Entergy’s “single largest customer” once the centre is online, the utility told the Financial Times.
US power consumption, known in the industry as “load”, is already at a record high but will leap by another 16 per cent by 2029, according to think-tank Grid Strategies.
The US Department of Energy says electricity demand from data centres used for artificial intelligence will triple in the next three years.
The forecasts for such growth in gas-fired generation are upending earlier forecasts. As recently as December 2023, the US Energy Information Administration expected a net decrease in gas-fired generation capacity from 2025 to 2030, according to analysis of EIA data shared with the FT by BloombergNEF.
Other companies are now racing to catch up with the US’s gas needs.
“I wish I could’ve predicted it 18 months ago,” said Bill Newsom, chief executive of Mitsubishi Power Americas, a division of one of the world’s largest gas turbine manufacturers. The company plans to invest “hundreds of millions” to expand its manufacturing capacity by as much as 50 per cent in the next three years, Newsom told the FT.
Share prices of utilities and turbine manufacturers, including Siemens Energy and GE Vernova, have risen sharply over the past year.
Big Oil producers, including ExxonMobil and Chevron, are also entering the business, designing plants to supply AI data centres directly, avoiding the grid.
Some producers are keeping ageing gas plants around, while others are building scale through acquisitions. Last year, Wood Mackenzie revised down 2035 expectations for total US gas plant retirements by 10 per cent.
On Friday, Constellation Energy, one of the country’s largest electricity providers, announced that it was buying Calpine, the largest independent power producer of gas, in a deal worth nearly $27bn, marking one of the largest deals in the power sector.
Texas, Tennessee, and South Carolina lead the expansion of new gas capacity, according to S&P. The switch from coal to gas is also fuelling this growth.
“Like everybody else in the world, we want renewables to catch up. We’re all in favour of the cleanest energy possible. The reality is, it’s going to take a long time for that to become more prevalent,” said Bob Warden, managing director at private equity firm Fortress Investment Group, which earlier this week acquired 850MW of mobile gas turbines.
