Electricity demand is growing due to artificial intelligence (AI) data centers and increased electrification, and companies are turning to natural gas turbines to fill the supply gap as intermittent wind and solar power are not reliable on a 24/7 basis. According to POWER, manufacturing costs for turbines, as with other commodities, have risen due to higher prices for raw materials, equipment components, and labor. Despite those challenges, manufacturers are expanding production by concentrating on a more efficient supply chain and manufacturing protocols. Mitsubishi Heavy Industries, for example, is prepared to double its production capacity within the next two years due to increased demand for the technology. The company sees demand being strong for at least the next decade.
Other gas turbine manufacturers are seeing a similar trend in turbine orders. New orders for GE Vernova’s gas turbines have nearly tripled year-over-year, reaching 55 gigawatts. These orders are expected to hit 60 gigawatts by the end of this year. New turbine orders for Siemens Energy were up 17% year-over-year, at least a third of which is due to data centers. As of August, Siemens Energy had 14 gigawatts of turbine orders year-to-date, with 60% of those orders targeted for data centers. Revenue for both GE Vernova’s and Siemens’ gas turbine business is at least three times higher than a year ago.
Tech Companies Are Using Gas to Power Their Data Centers, as are Utility Companies
Natural gas is abundant, dispatchable, and backed by a sector with proven experience in infrastructure delivery, supply chain integration, and stakeholder engagement. It is also increasingly being considered “green” energy. ExxonMobil’s annual energy outlook projects a more than 20% increase in global natural gas demand by 2050, driven by rising industrial use and power needs in emerging markets. Gas plants can be built in 1-2 years, providing concentrated generating power that can be built near data centers, existing transmission lines, or on-site, as many technology firms are doing.
For example, Tesla had 35 on-site gas turbines built to supply electricity for its Colossus xAI supercomputer facility in Memphis, Tennessee, which was built and expanded to 200,000 GPUs in less than six months in 2024. Another firm building data centers with on-site gas plants is EdgeConneX, which plans to build two data centers in New Albany, Ohio, to be completed by the fall of 2027. It will use existing warehouse space and new construction, amounting to 1.2 million square feet.
Meta is building a large data center in northeast Louisiana, which will cover 3.5 square miles. According to TriStar Daily, Entergy Louisiana is building three large gas-fired power plants for the site at a cost of more than $3 billion. Louisiana regulators approved utility Entergy’s plan to build gas-fired power plants and grid infrastructure to serve Meta’s $10 billion data center. Completion is expected in 2030, at which point, the complex will use twice as much electricity as New Orleans.
In Texas, a data center hot spot, gas-fired power plants are planned for deployment, including 108 new plants and 17 expansions, which will provide 58 gigawatts of power, with 60% of that to be completed by the end of 2028. When completed, they will deliver more than three times as much electricity as all of the wind systems currently operating in Texas, which has the most wind capacity of all U.S. states.
Other hot spots for data centers are also having their utilities build gas-fired plants. Georgia Power won regulatory approval for a rapid buildout of power plants to meet data center growth, filing a proposal for more than $15 billion, with much of the new infrastructure to be gas-powered. Virginia’s Dominion Energy is pushing for a similarly large investment in fossil-fueled power to serve the world’s highest concentration of data centers. Dominion plans nearly six gigawatts of new gas infrastructure by 2036, defying the state’s 2045 deadline for achieving 100% carbon-free electricity, given that gas-fired plants can operate for four or five decades.
Other actions show that the net-zero transition is not standing in the way of increased natural gas-generating technologies. From reporting in Power, an environmental group has accused Texas of having “illegally rubber-stamped permits for the construction of at least three large power plants and potentially others — without the stringent air pollution limits or public hearings required under the federal Clean Air Act.” On June 11, Trump’s Environmental Protection Agency proposed new rules for the nation’s fossil fuel-burning power plants that would remove the limits on greenhouse gases implemented by the Biden administration, which would have made existing coal plants and new gas plants obsolete unless they added carbon capture equipment that is uneconomic and not commercially available.
Google Plans Data Center Power Flexibility
Google has made partnerships with TVA and Indiana Michigan Power that will have its data center operator reduce power during periods of high demand. In other words, it will use less electricity during the time the grid is under the greatest stress, which will make it possible for tech companies to get the power needed without straining the system. According to Canary Media, grids and power plants are overbuilt to meet peak demands, or “worst-case conditions.” But if data centers agree to avoid using power during those times, it can obviate the need to expand the grid further to serve new, higher peak demand.
Analysis
The explosive growth of AI and the enormous data centers that are required to take full advantage of its potential have demonstrated the importance of affordable energy, specifically, abundant natural gas. Furthermore, the race for AI market dominance has also shown the supply chain challenges that exist, which include higher material prices and the bureaucratic red tape delaying permitting and construction. Additionally, the irony of so many tech companies, including Google, after spending years supporting anti-fossil fuel rhetoric and renewable energy supremacy, now seeing the importance of natural gas in their time of need, can’t be overstated.
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