U.S. Secretary of Energy, Doug Burgum | Facebook
U.S. Secretary of Energy, Doug Burgum | Facebook
With AI and data center demand surging, natural gas is emerging as the most efficient, scalable energy source. It's poised to become the nation's top power provider.
The U.S. plans to build 80 new gas power plants by 2030. As AI drives electricity use to as much as 12% of total U.S. demand by 2028 (up from 4.4% today), affordable and reliable energy is critical.It’s a two-way street, as AI also boosts gas and oil efficiency through predictive maintenance, drilling optimization, and more competent logistics.
A Goldman Sachs report predicts that natural gas will supply approximately 60% of the power needed for data centers through 2030. The electricity demand from one AI data center can rival the demand for a small city. As data centers are built in New Jersey and New York, electricity demand is rising. New York benefits from substantial hydro resources; New Jersey, betting on offshore wind and solar, is coming up short.
As Interior Secretary Doug Burgum bluntly stated: “We’re never gonna build an AI data center in New York or New England if natural gas costs three times more than in Pennsylvania.”
Natural gas remains essential.
NRG’s $12 billion deal to acquire 18 gas-fired plants across nine states doubles its capacity in Virginia, where natural gas powers over half the state’s electricity. A new pipeline is in the works to meet that state's growing data center demand.
AI requires power, and lots of it.
The only way to meet rising demand without risking blackouts or price spikes is through rapid expansion of natural gas capacity. A major grid operator is sounding the alarm over summer strain as demand spikes. The culprit? A rush to shut down reliable fossil-fuel plants in states like Ohio and replace them with intermittent solar power in a region with limited sunshine. Ohio, once a power exporter, now faces potential shortfalls by 2027 if PJM’s grid isn't upgraded.
Demand is soaring, driven by Artificial Intelligence, data centers, and manufacturing. The National Weather Service forecasts a hotter-than-normal summer, further stressing the grid. As the grid strain grows, Republicans in Congress are wavering on clean energy subsidies. The Senate is fighting to preserve parts of the Inflation Reduction Act, despite campaign promises to eliminate it.
Instead of terminating the IRA’s trillion-dollar handouts, dubbed the “Green New Scam,” its budget merely delays them, relying on easily-reversed “phaseouts” set to begin in four years. This includes the most costly and market-distorting tax credits for wind and solar. These subsidies accelerate the shutdown of reliable power sources by pushing up consumer costs and destabilizing the grid.
Congress promised to kill the costly Inflation Reduction Act (IRA) energy subsidies. Instead, they’re preserving most of them under the guise of "phaseouts," easily reversed by future political pressure. These subsidies distort markets, drive reliable plants offline, and reward wind and solar even when they flood the grid with unwanted power—the result: hostile prices, rising costs, and a less reliable grid.
Energy expert Alex Epstein points out that the most important thing to know about a “phaseout” of subsidies is that, unlike the promised “termination” of subsidies, a “phaseout” is easily reversed by future Congresses under pressure from lobbyists.
The IRA’s subsidies for solar and wind are crippling grid reliability just as demand surges. Congress must fully repeal them before the grid buckles under the weight of bad policy.
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