Natural Gas Power Plant Pipeline Swells To Fuel Data Center Growth

The data center industry’s growing reliance on natural gas picked up steam this week, with federal regulators fast-tracking dozens of new gas power plants and large data center firms unveiling plans for new gas-powered campuses. 

As the booming data center industry’s electricity consumption strains regional power grids, utilities and developers are increasingly looking to new natural gas generation as the fastest path to securing power. Data center growth could add 50 gigawatts of new gas generation to U.S. grids by 2030, according to S&P Global, single-handedly raising power sector gas demand in the U.S. by almost 17%.

This trend is driven by utilities adding capacity to regional grids and by data center firms building campuses directly connected to new on-site or nearby power plants.

On both of those fronts, the shift toward natural gas has gained momentum in the past week.

On Tuesday, U.S. federal energy regulators approved a plan by PJM Interconnection, the country’s largest regional grid operator, to fast-track the review process for up to 50 “shovel-ready” power generation projects, mainly gas plants, to head off an impending power shortage caused largely by data center load growth.

That approval came during a seven-day stretch when major data center firms like Vantage and EdgeConneX unveiled a series of plans to connect campuses directly to new gas plants instead of the grid. 

The flood of new generation projects appearing on the short-term planning horizon marks an acceleration of the industry’s embrace of natural gas as a means to getting massive quantities of power quickly as wait times for grid connections in key data center markets push north of 10 years. 

“Cloud and AI technologies require the rapid development of additional data center infrastructure,” Vantage Data Centers President Dana Adams said in a statement announcing a partnership with natural gas firm VoltaGrid Monday.  “The sector faces a major hurdle in securing timely power at scale.” 

Tuesday’s Federal Energy Regulatory Commission decision will allow PJM to expedite the review process required for new generation projects to connect to the grid. Up to 50 new generation projects, many of them gas plants, will now be reviewed and potentially approved as soon as this spring. PJM’s plan to fast-track reviews had been opposed by renewables developers, who contend it unfairly prioritized natural gas projects. 

PJM has argued these measures are needed to avoid an impending capacity shortage that could impact the system as soon as next year, with data center demand growth identified as a key driver of those looming constraints. The company recently doubled its estimates for large-scale load growth by 2029 from 15 GW to 30 GW. 

PJM’s service area is expected to be one of the most impacted by data center load growth, according to a Grid Strategies study. The grid operator provides power to all or part of 13 states, including key data center hubs like Virginia, North Carolina, Ohio, Illinois and Indiana.

While utilities and energy developers are scrambling to build out new gas plants to expand grid capacity in major data center markets — one study identified more than 20 GW worth of new generation planned by 2040 in the Southeast alone — developers of large-scale data center campuses are increasingly pursuing projects with on-site natural gas plants to provide power “behind the meter.”

Nearly a third of all data centers are expected to produce their primary power on-site by 2030, according to a Bloom Energy report — and by far the most common fuel for that generation in the near term is natural gas. Fossil fuel giants like Exxon Mobil and Chevron have launched new power plant business lines focused specifically on the data center market, while tech behemoths like Meta and OpenAI are building campuses alongside gas plants capable of providing the hundreds of megawatts they need. 

On Tuesday, Denver-based Vantage announced it is partnering with energy firm VoltaGrid to deploy more than a gigawatt of on-site gas generation across the developer's North American portfolio. The two firms emphasized the speed at which this power could be put in place compared to interconnections to the power grid, with VoltaGrid in some cases using modular mobile generators to get power to a site. 

Vantage didn't identify the locations where gas generation will be deployed through the deal. The DigitalBridge-backed company’s North American footprint includes campuses in central Washington, Northern Virginia, Phoenix, Montreal and Quebec City. In June, Vantage announced plans for a new $185M campus development near Columbus, Ohio. 

The Columbus market is also the site of a 120 MW gas power plant EdgeConneX proposed earlier this week. Slated for a 49-acre site in Licking County, the plant is intended to provide behind-the-meter power to the firm’s planned data center at the nearby New Albany International Business Park. EdgeConneX is seeking permits with state regulators, with construction expected to begin as soon as the fourth quarter of this year.

New hyperscale developer CloudBurst Data Centers this week unveiled plans for a gas-powered campus in San Marcos, Texas. The firm announced a deal with natural gas pipeline firm Energy Transfer to deliver enough gas to the site to generate 1.2 GW. 

Other firms are pursuing gas-powered campuses north of the border. Crypto miner Bitdeer Technologies Group acquired a 101 MW gas power project in Alberta last week that it plans on developing into a 99 MW mining operation. Days earlier, AI data center specialist Crusoe entered into an agreement with energy firm Kalina Distributed Power to develop data centers next to three separate 170 MW gas plants in the same province. 

Crusoe, which pivoted to AI from bitcoin mining, previously developed a data center campus in Abilene, Texas, that is now the initial site of Stargate, the massive data center joint venture between OpenAI, Oracle, SoftBank and other partners first announced by President Donald Trump last month. The Abilene Stargate site will also reportedly be powered by an on-site natural gas power plant.