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Natural Gas Power Plant Cost Surge
Increase in cost per kilowatt (kW) for new CCGT power plants (2023 vs 2025).
Primary Sources
Texas power demand surge tests grid as data center buildout accelerates
Some Texas developers are already bypassing the grid by building behind-the-meter power plants at their sites. Projects including Oracle and OpenAI's Stargate data centers in Abilene and Shackelford County use natural gas, reflecting how power access is becoming a decisive factor in data center financing, construction, and operating strategy.
Report: Data Center Electricity Demand Rising, Impacting Grid Capacity ...
Report: Data Center Electricity Demand Rising, Impacting Grid Capacity and Policy Debates U.S. Data Center Electricity Consumption Increases, Impacting Grid Planning Electricity consumption by data centers in the United States has significantly increased, posing challenges for grid operators and utilities, according to a recent report. The International Energy Agency (IEA) found that data centers drove half of all growth in U.S. electricity use in 2025, as global power demand rose by 3% that year. [1] This surge in demand is occurring amid ongoing policy debates concerning infrastructure investment and who should bear the costs of grid upgrades. A report by analysts at S&P Global Energy indicates that rising demand for compute power is reshaping infrastructure, policy and investment decisions. [2] The situation has prompted the White House to outline a policy requiring major technology companies to cover the electricity, water and grid infrastructure costs of their expanding artificial intelligence (AI) data centers. [3] Growth in Consumption and Regional Strain Specific demand forecasts illustrate the scale of the challenge. The grid operator for the Midcontinent Independent System Organization expects load to jump 35% by 2035 due largely to data center growth. [4] Similarly, PJM Interconnection – the nation's largest grid serving 65 million people across 13 eastern states – has launched an emergency proposal to secure 15 gigawatts of new electricity supply to prevent potential shortfalls. [5] The strain is markedly concentrated in certain regions. Texas, a major hub for development, currently has 84 operating data centers and 140 planned projects, according to an April 2026 analysis. [6] This regional concentration has led to specific planning challenges. Stephanie Chesnick Cutter, EY Americas Power & Utilities leader, noted that forecasts are being refined as utilities require larger deposits and other contractual commitments from hyperscale developers to minimize ratepayer risk. [4] Factors Driving the Demand Increase The expansion of artificial intelligence computing, often referred to as the AI race, is cited as a primary driver of the demand surge. The training of large AI models requires immense power; for instance, training GPT-4 consumed approximately 50 gigawatt-hours of electricity. [7] Future models could require power inputs on an unprecedented scale of thousands of gigawatt-hours. [7] Increased cloud service adoption and general digitalizat...
Data center demand drives 66% surge in natural gas power plant costs
Natural gas power plant costs have nearly doubled in two years and take 23% longer to build as data center electricity demand skyrockets.
US Natural Gas Power Plant Construction Costs Rise 66% by 2025
The construction costs for natural gas-fired power plants in the US have surged by 66% from 2023 to 2025, reaching an average of $2,157 per kilowatt. This increase is driven by rising electricity demand, particularly from data centers and new manufacturing facilities.
