Energy companies in the US are planning new natural gas-fired power generation at the fastest pace in years, one of the clearest signals yet that fossil fuels are likely to have a longer runway than previously thought.
From Florida to Oregon, utilities are racing to meet a surge in demand from power-hungry AI data centers, manufacturing facilities and electric vehicles. The staying power of gas, which in 2016 overtook coal as the No. 1 US source of electricity, has surprised some experts who not so long ago had projected the era of frenzied domestic demand growth for the fuel might soon come to an end.
“A few years ago, there was the expectation that solar and wind would be able to solve our additional generation needs,” said Jed Dorsheimer, group head of the energy and sustainability sector at investment bank William Blair, who now sees gas accounting for as much as 60% of new generation. “There’s been a call for peak oil and peak gas, and eventually those calls will be right.” But not anytime soon.
The prolonged reign of natural gas will bring major environmental consequences, though both sides dispute in which direction. On one hand, the abundance of cheap US gas from the fracking boom has hastened the decline of coal, with its weighty carbon footprint. Advocates have long promoted natural gas as a “bridge fuel,” or a less carbon-intensive way to ease the transition from dirtier fossil fuels. Gas plants are also attractive to grids trying to help back up the deluge of intermittent wind and solar power coming online. “Natural gas is an essential partner for maintaining grid reliability and deploying more renewables,” said Dan Brouillette, president of Edison Electric Institute, which represents investor-owned utilities.
But gas infrastructure is also prone to leaking methane, which has 80 times the planet-warming impact of carbon dioxide in its first 20 years in the atmosphere. And once new gas plants come online, they’re likely to run for 40 years or longer. That means the approval of new facilities today risks locking in dangerous earth-warming emissions decades beyond President Joe Biden’s goal of reaching a zero-emission electricity sector by 2035.
“We were poised to shift away from the energy system of the past, from costly and polluting infrastructure like coal and gas plants. But now we’re going in the opposite direction,” said Kendl Kobbervig, advocacy director at Clean Virginia, which promotes green energy in the state. “A lot of people are feeling whiplash.”
In the first six months of the year alone, companies have announced plans to build more new gas power capacity across the US than they did in all of 2020, data from Sierra Club show. And if the second half looks anything like the first, 2024 will mark the most new gas-power generation announced since at least 2017, when the environmental group started tracking the data.
For the capacity announced in 2024 alone, Texas has the most new generation in the works, the Sierra Club data show. Looking at everything in the queue, regardless of announcement date, the US Southeast is planning the most gas additions, according to researcher Enverus. In total, more than 200 gas units are in various stages of development across the US with plans to start up between now and 2032, for a total of about 86 gigawatts of power, analytics firm Yes Energy estimates. Enverus calculates it’s even higher — more than 100 gigawatts, or enough to power close to 80 million homes.
With natural gas remaining many US utilities’ favorite power source, some have been quietly revising their decarbonization goals, essentially unwinding years of hard work planning for a future with less of the fossil fuel. Berkshire Hathaway Inc.’s PacifiCorp, for one, sees its carbon emissions dropping 63% from 2005 to 2030, compared to an earlier projected reduction of 78% over the same time period, after rising demand forecasts and the relaxing of some requirements has extended its emissions reductions timeline.
PacifiCorp has announced plans this year to add more than five gigawatts of new natural gas generation while canceling about seven gigawatts of renewable energy projects over the next two decades, according to an analysis by Bloomberg Intelligence climate analyst Andrew John Stevenson. A spokeswoman for the Warren Buffett-owned utility said the company’s increased reliance on gas comes in large part from its decision to convert some coal units to gas and that it still plans to meet its carbon dioxide emission reductions of 80% by 2035 and 100% by 2050.
“This flip-flopping where utilities had thought they could get rid of new gas and now they are committed to it, that’s troubling,” Cara Fogler, Sierra Club’s deputy director of research, said of the wider power industry. US power-sector demand for gas could rise as much as 30% by 2030 from today’s levels, Bloomberg Intelligence analysts Rob Barnett and Patricio Alvarez estimate.
Of course, not every announced plant makes it through construction or ultimately connects to the grid. Sierra Club says about 10 gigawatts of earlier plans were canceled last year compared to the nearly 45 gigawatts announced. Berkeley Lab estimates only about one-third of interconnection requests have historically resulted in active gas plants, though that’s higher than either wind (20%) or solar (13%). Some planned projects will may also get scrapped over concerns their cost will further inflate rising power prices.
Jigar Shah, director of the loan programs office at the US Department of Energy, said bills will rise about 10% a year if utilities add new gas generation. Rather than building new plants, utilities can try to meet growing demand through more cost effective means like tapping into home solar and battery systems or replacing power lines with heavier duty ones that can transport more electricity, Shah said.
“What DOE has been saying is that we have the tools necessary to meet this moment, but we have to find a way to do things in a smarter, not harder, way,” he said.
Still, the booming power needs are hard to ignore. Electricity usage by data centers is poised to surge as much as ten times current levels by 2030. In addition to building new plants, some power companies will retire gas plants at a slower rate than previously expected, said power market analyst Patrick Finn of energy consultancy Wood Mackenzie. “It makes clean energy goals that much more difficult to attain,” he said.
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