US natural gas power is booming thanks to artificial intelligence

U.S. power companies are announcing plans for the largest volume of new natural gas capacity in years as the AI ​​boom drives demand for electricity.

In the first half of 2024, electric power firms unveiled plans for new gas-fired capacity equal to all capacity announced in 2020, according to data from the Sierra Club cited by Bloomberg.

Gas-fired generation growth threatens current U.S. emissions and “clean grid” goals.

Natural gas-fired electricity production in the United States has increased year-to-date compared to the same period last year as total energy demand has increased with warmer temperatures and demand from data centers.

Natural gas could be a big winner in growing demand for AI-driven energy in the U.S. While many tech companies prefer to power their AI development centers with solar and wind power, the need to quickly build and power these data centers would increase demand for natural products. gas, too, analysts say.

After more than a decade of declining energy use in America, the boom in AI and chip manufacturing and other technologies is driving higher demand for US electricity.

For years, natural gas has accounted for the largest share of U.S. energy production, at about 40 percent of all electricity generation.

This year, natural gas is expected to provide about 42% of America’s electricity, similar to last year, as total consumption will increase by 3% in 2024 and another 2% in 2025, according to data from US Energy Information Administration (EIA). ).

As demand increases with warmer temperatures and higher cooling demand, as well as data centers that demand more and more energy, U.S. utilities have increased generation from gas-fired capacity to meet higher peak loads. increase.

Renewable power generation has set record levels from both solar and wind, but natural gas—and now, to a lesser extent, coal—continues to be the basic backbone of the U.S. power generation system .

By Charles Kennedy for Oilprice.com

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