Natural gas dominates U.S. power generation as AI drives electricity demand

Natural gas has become the most preferred source of power generation in the United States as electricity consumption increases rapidly. This has been mainly attributed to the advancement of AI and related technologies, which incorporate vast data centers that use much power to function effectively. 

In the first half of 2024, U.S. power companies announced plans for new gas-fired capacity at the highest level since 2020, indicating a shift in energy demand. Sierra Club data, as reported by Bloomberg, shows that the use of natural gas has surged as firms seek to meet energy demands. Increased advancements in AI technologies and higher temperatures affect the U.S. electricity grid even more. 

Surge in natural gas usage threatens U.S. clean energy and emission goals

Natural gas, which has been a major player in the U.S. energy sector for decades, continues to be the most consistent in providing power quickly. Though most tech companies prefer using solar and wind power in their AI facilities, the urgency of the projects has made gas more popular. This is because natural gas provides the necessary agility to establish these data centers within the shortest time possible.

The recent revival of a natural gas boost puts the United States’ clean energy and emission reduction goals at risk. For years, the U.S. has been working towards a green grid by increasing the level of renewables on the grid, but the recent boost in natural gas power generation can threaten these goals. 

Natural gas-fired power is estimated to have contributed to about 42% of the total electricity produced in the U.S., according to the U.S. Energy Information Administration (EIA), slightly higher than the previous year.

Although solar and wind energy have soared to new levels of power production, they cannot yet fill the baseload energy generation still met by natural gas. Coal, which was once a leading source of electricity in the United States, is now being gradually replaced, and gas remains the main non-renewable source. An increase in gas-fired generation might put the country’s efforts to reduce its carbon emissions in peril and hinder the attainment of future clean energy targets.

Wells Fargo study forecasts significant electricity demand increase by 2030

This has also been fueled by an increase in the usage of electricity in other aspects, such as warmer weather. These heatwaves have led to increased usage of air conditioners, thus further straining the United States power grid. As a result, the utilities are adding new gas-fired generators to meet the peak demands of the electricity loads. This trend is expected to persist in the future, with electricity usage expected to increase by 3% in 2024 and another 2% in 2025, as per the EIA.

A study conducted by Wells Fargo in April estimated that electricity demand could increase by 20% by 2030. This may be largely due to the increasing number of AI data centers and the fast expansion of electric vehicles. AI data centers will contribute an additional 323 TWh to the U. S electricity grid by 2030, which is seven times the current annual electricity consumption of New York City. Key consumers of power such as Amazon, Google, Microsoft, and Meta have pledged to use renewable energy to power their data centers.