Big Tech’s AI ambitions are straining the US power grid. Natural gas might be its answer.-amtomessage

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2025-09-24

Big Tech’s AI ambitions are straining the US power grid. Natural gas might be its answer.

The energy demand from data centers is expected to double by 2028, according to the Lawrence Berkeley National Laboratory. But the US power grid, full of aging infrastructure, years-long connection queues, and decades of stagnant industrial development, is largely unequipped to handle that demand today.

Much of the answer may lie in “off-grid” power, in which data centers get energy directly from their own sources instead of waiting years to be plugged into the grid.

And natural gas is positioned to meet a large share of this demand.

“We’re focused on directly powering data center facilities so that they don’t have to wait for these multiyear grid expansions that, unfortunately, is what it takes in the United States,” Chad Zamarin, CEO of pipeline operator Williams Companies, said at a conference in August.

Shares of Expand Energy (EXE), the country’s largest natural gas producer, are up more than 24% over the past year. Shares of fellow producers EQT Corporation (EQT) and Range Resources (RRC) are up more than 40% and more than 13%, respectively, while Williams Companies (WMB) is up more than 32%.

Off-grid power can come from a variety of sources.

In March 2024, Talen Energy (TLN) agreed to provide AWS (AMZN) with more than 1.9 gigawatts of energy from its nuclear Susquehanna Steam Electric Station to power a data center next to the plant. And other Big Tech players have promised to find renewable energy sources, like nuclear or solar power, for their AI ambitions.

But these projects can take decades to take on line, whereas a natural gas plant can take around five years, according to Morgan Stanley. And some of these plants are already on line.

“Any market in the United States that has any significant renewables, the only reason why it works is because we’ve got natural gas capacity that picks up the slack when the sun sets and the wind slows down,” Williams Companies’ chief Zamarin said at a conference in September.

And natural gas is already abundant in the US, cleaner than coal, and cheaper and faster to develop than nuclear power.

In February, natural gas producer Energy Transfer (ET) signed an agreement with the data center operator CloudBurst to provide 1.2 gigawatts of off-grid power for a data center outside San Marcos, Texas. In September, asset manager Blackstone (BX) purchased a natural gas plant in Pennsylvania for more than $1 billion in a bet on future demand.

The world’s biggest tech companies are also looking to broker deals for natural gas. In December 2024, Meta (META) began work on a more than 2,000-acre site in Richland Parish, Louisiana, where it will spend $10 billion on a massive data center.