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AI Surge Fuels Unexpected Boom in US Gas Power Plants

by EUToday Correspondents
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Energy companies in the United States are accelerating plans to build new natural gas power plants in response to a surge in electricity consumption by artificial intelligence (AI) data centres.

According to a report by Bloomberg, this unexpected trend is taking shape as companies rush to meet the growing demand from AI data centres, manufacturing facilities, and electric vehicles, all of which consume substantial amounts of electricity.

Natural gas has shown resilience as a primary energy source, having surpassed coal in 2016 to become the leading source of electricity in the US. This development has surprised some experts who had anticipated a decline in domestic demand for natural gas. It was widely believed that the rapid growth in renewables like solar and wind would soon cover the additional electricity generation needs.

Jed Dorsheimer, head of energy and environmental sector at investment bank William Blair, noted the unexpected durability of natural gas in the energy mix. “A few years ago, there was an expectation that solar and wind energy would be able to meet our additional generation needs,” he remarked. Contrary to these earlier projections, it is now estimated that natural gas will account for up to 60% of new electricity generation capacity in the coming years.

During the first half of this year alone, US energy companies announced plans to construct more new gas-fired power plants than in the entire year of 2020. Data from Sierra Club indicates that more than 200 gas installations are in various stages of development across the country, with plans to bring them online by 2032. Collectively, these new plants are expected to provide approximately 86 gigawatts of electricity.

The driving force behind this surge in natural gas power plants is the anticipated increase in electricity consumption by AI data centres. Bloomberg’s report suggests that electricity usage by these centres could rise tenfold from current levels by 2030. This rapid growth in demand is prompting energy companies to rethink their strategies and invest in gas-powered generation to ensure a stable and reliable power supply.

In addition to building new plants, some energy companies are also considering slowing the decommissioning of older gas-fired power plants. Energy market analyst Patrick Finn from consultancy Wood Mackenzie noted that certain facilities would be kept operational longer than initially planned to help meet the rising demand.

Read also:

Russia’s Attempt to Re-enter the European Gas Market, by Mykhailo Gonchar

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