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The AI boom is driving a significant increase in demand for electricity in the United States.
Natural gas-fired power generation is on the rise to meet this increased demand.
The surge in natural gas use poses a challenge to achieving clean energy goals.
U.S. power-generating companies are announcing plans for the highest volume of new natural gas-fired capacity in years as the AI boom is driving demand for electricity.
During the first half of 2024, electricity-generating firms unveiled plans for the new gas-powered capacity equal to all capacity announced in 2020, according to data from Sierra Club cited by Bloomberg.
The increase in gas-fired generation jeopardizes the current U.S. emissions and ‘clean grid’ goals.
Natural gas-fired electricity generation in the United States has jumped year-to-date compared to the same period last year, as total power demand rose with warmer temperatures and demand from data centers.
Natural gas could be a big winner in the AI-driven power demand surge in the U.S. While many tech companies prefer to power their AI development centers with solar and wind, the need to get these data centers built and powered fast would boost demand for natural gas, too, analysts say.
After more than a decade of flatlining power consumption in America, the AI boom and the chip and other tech manufacturing are leading to higher U.S. electricity demand.
For years, natural gas has accounted for the largest share of U.S. power generation, at around 40% of all electricity-generating sources.
This year, natural gas is expected to provide around 42% of America’s electricity, similar to last year, as total consumption is set to grow by 3% in 2024 and another 2% in 2025, per data from the U.S. Energy Information Administration (EIA).
As demand rises with warmer temperatures and higher demand for cooling, as well as data centers necessitating more and more power, utilities in the U.S. have raised the generation from gas-fired capacity to meet higher peak loads.
Renewable power generation has set record highs from both solar and wind, but natural gas – and, now to a lesser extent, coal – continue to be the baseload backbone of the U.S. power generation system.
By Charles Kennedy for Oilprice.com
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