Hundreds of gas-fired plants with up to 100 GW to be built in the US due to AI

The United States is preparing for significantly higher electricity consumption, linked among other things to the development of artificial intelligence, data centres and electric vehicles. Around 200 new facilities with installed capacity of up to 100 GW are currently at various stages of preparation, Bloomberg reports. Experts fear that natural gas-fired power generation will remain in the country for longer than originally expected. 

The development of computer and mobile applications that use artificial intelligence is gradually beginning to have a real impact on electricity generation as well. To meet the ever-increasing consumption of data centres, which are essential for artificial intelligence, electricity producers are likely to respond with new gas-fired and combined-cycle gas turbine power plants.

Bloomberg data for the first half of this year already show that this year should be a record one. In the first half alone, US energy companies announced plans for around 25 GW of new installed capacity. This already exceeds the total for 2020 and is broadly comparable with the plans announced by electricity producers in 2021 and 2022.

Natural gas-fired power generation is currently at the forefront in the United States primarily thanks to very low natural gas prices and an oversupply on the market resulting from domestic production, particularly from shale deposits. By comparison, while in the European Union the price of natural gas under the benchmark contract at the TTF hub is traded for the following month at around EUR 35/MWh, at the US Henry Hub trading point the same amount of gas sells for around EUR 7.

In addition to low fuel costs, an argument in favour of gas-fired plants is also their flexibility, and thus their ability to cover peaks during fluctuating renewable generation.

Climate protection concerns

However, the current development will not please climate advocates in particular. Although natural gas-fired power generation is less emissions-intensive than coal, which was previously dominant, it is still a fossil fuel. Compared with coal, natural gas has the disadvantage that its extraction and use can increase methane emissions. These are said to have up to 80 times the warming effect of carbon dioxide emissions.

However, this is not the only concern of climate protection advocates and opponents of fossil fuels. If a natural gas power plant is only now in preparation, it can reasonably be expected to operate for several more decades. Such a development is incompatible with the target of achieving emissions-free energy by 2035, set by US President Joe Biden.

President Biden has already had to address a similar scenario in recent months in connection with liquefied natural gas (LNG) terminals. To the displeasure of some energy companies, he announced that no new permits would be issued for the construction of LNG export terminals. The reason for this move was precisely to prevent the United States from further investing in infrastructure it wants to phase out in the short to medium term.

The issue also affects Europe, but less so the Czech Republic

Although the issue is not as visible in the European Union, data centre consumption is also expected to grow significantly there. According to International Energy Agency (IEA) data, data centre consumption in the EU reached just under 100 TWh in 2022, equivalent to 4 % of energy consumption in Europe. By 2026, however, this figure should rise to approximately 150 TWh, as the number of data centres in Europe is expected to increase.

This year, the Czech Republic had a chance of gaining a major new Microsoft data centre. However, Microsoft changed its plans at the last minute and will build the data centre in Scandinavia. This time, the main reason was not high energy prices or bureaucracy, but a lack of renewable energy.