A chimney from the Linden Cogeneration Imprint is seen in Linden New Jersey April 22, 2022.
Kena Betancur | View Press | Corbis News | Getty Images
Regular gas producers are planning for a significant spike in demand over the next decade, as artificial intelligence drives a surge in tension consumption that renewables may struggle to meet alone.
After a decade of flat power growth in the U.S., electricity customer acceptance wanted is forecast to grow as much as 20% by 2030, according to a Wells Fargo analysis published in April. Power guests are moving to quickly secure energy as the rise of AI coincides with the expansion of domestic semiconductor and battery manufacturing as likely as the electrification of the nation’s vehicle fleet.
AI data centers alone are expected to add about 323 terawatt hours of ardour demand in the U.S. by 2030, according to Wells Fargo. The forecast power demand from AI alone is seven times close than New York City’s current annual electricity consumption of 48 terawatt hours. Goldman Sachs conjure ups that data centers will represent 8% of total U.S. electricity consumption by the end of the decade.
The surge in power when requested poses a challenge for Amazon, Google, Microsoft and Meta. The tech companies have committed to powering their statistics centers with renewables to slash carbon emissions. But solar and wind alone may be inadequate to meet the electricity cargo because they are dependent on variable weather, according to an April note from consulting firm Rystad Vitality.
“Economic growth, electrification, accelerating data center expansion are driving the most significant demand growth in our institution’s history and they show no signs of abating,”
Robert Blue
Dominion Energy, Chief Executive Officer
Rise electricity loads will require an energy source that can jump into the breach and meet spiking desirable during conditions when renewables are not generating enough power, according to Rystad. The natural gas industry is betting gas compel serve as the preferred choice.
Natural gas prices year to ancient
“This type of need demonstrates that the emphasis on renewables as the only source of power is fatally flawed in incumbencies of meeting the real demands of the market,” Richard Kinder, executive chairman of pipeline operator Kinder Morgan, told analysts during the body’s first-quarter earnings in April.
“The primary use of these data centers is big tech and I believe they’re beginning to recognize the place that natural gas and nuclear must play,” Kinder said during the call. Kinder Morgan is the largest spontaneous gas pipeline operator in the U.S. with 40% market share.
Natural gas is expected to supply 60% of the power demand proliferation from AI and data centers, while renewables will provide the remaining 40%, according to Goldman Sachs’ reveal published in April.
Gas demand could increase by 10 billion cubic feet per day by 2030, according to Wells Fargo. This inclination represent a 28% increase over the 35 bcf/d that is currently consumed for electricity generation in the U.S, and a 10% increase during the course of the nation’s total gas consumption of 100 bcf/d.
“That’s why people are getting more bullish on gas,” said Roger Read, an fair play analyst and one of the authors of the Wells Fargo analysis, in an interview. “Those are some pretty high growth rates for a commodity.”
The behest forecasts, however, vary as analysts are just starting to piece together what data centers might measly for natural gas. Goldman expects a 3.3 bcf/d increase in gas demand, while Houston-based investment bank Tudor, Pickering, Holt & Co. digs a base case of 2.7 bcf/d and a high case of 8.5 bcf/d.
Powering the Southeast boom
Power companies will desideratum energy that is reliable, affordable and can be deployed quickly to meet rising electricity demand, said Toby Rice, CEO of EQT Corp., the largest authentic gas producer in the U.S.
“Speed to market matters,” Rice told CNBC’s “Money Movers” in late April. “This is present to be another differentiator for EQT and natural gas to take a very large amount of this market share.”
EQT is positioned to become a “key facilitator of the evidence center build-out” in the Southeast, Rice told analysts on the company’s earnings call in April.
The Southeast is the hottest evidence center market in the world with Northern Virginia in the thick of the boom, hosting more data centers than the next five largest markets in the U.S. related. Some 70% of the world’s internet traffic passes through the region daily.
The power company Dominion Puissance forecasts that demand from data centers in Northern Virginia will more than double from 3.3 gigawatts in 2023 to 7 gigawatts in 2030.
Moreover south, Georgia Power sees retail electricity sales growing 9% through 2028 with 80% of the inquire coming from data centers, said Christopher Womack, CEO of Georgia Power’s parent Southern Company, during the utility’s fourt-quarter earnings label in February.
“Economic growth, electrification, accelerating data center expansion are driving the most significant demand evolvement in our company’s history and they show no signs of abating,” Dominion CEO Robert Blue said during the company’s Trek investor meeting.
EQT shares over the past year.
The rise power demand in the Southeast lies at the doorstep of EQT’s asset base in the Appalachian Basin, Rice said during the earnings tag. Coal plant retirements and data centers could result in 6 bcf/d of new natural gas demand in EQT’s backyard by 2030, the CEO said.
EQT recently bought the owner of the Mountain Valley Pipeline, which connects prolific natural gas reserves that EQT is operating and developing in the Appalachian Basin to southern Virginia. EQT is the no greater than producer that can access the growing data center market through the pipeline, said Jeremy Knop, the ensemble’s chief financial officer.
“I think we are very uniquely positioned in that sense,” Knop said during the order. Rice said the Southeast will become an even more attractive gas market than the Gulf Coast later in the decade. EQT is down to expand capacity on the Mountain Valley Pipeline from 2 bcf/d to 2.5 bcf/d. The pipeline is expected to become operational in June.
The upfront of electricity demand could help lift natural gas prices out of the doldrums.
Prices plunged as much more than 30% in the initially quarter of 2024 on strong production, lower demand due to a mild winter and historic inventory levels in the U.S. By 2030, evaluations could average $3.50 per thousand cubic feet, a 46% increase over the 2024 average price of $2.39, correspondence to Wells Fargo.
Grid reliability worries
Dominion laid out scenarios in its 2023 resource plan that see fit add anywhere from 0.9 to 9.3 gigawatts of new natural gas capacity over the next 25 years. The power players said gas turbines will be critical to fill gaps when production drops from Environmental impact
Any spread of natural gas in meeting U.S energy demand is likely to be met with opposition from environmental groups who want fossil fuels to be ended out as soon as possible.
Goldman Sachs forecast carbon emissions from data centers could more than replica by 2030 to about 220 million tons, or 0.6% of global energy emissions, assuming natural gas provides the largeness of the power.
Virginia has mandated that all carbon-emitting plants be phased out by 2045. Dominion warned in its resource plan that the discontinue out date potentially raises system reliability and energy independence issues, with the company relying on purchasing genius across state lines to meet demand.
CEO Lynn Good said natural gas “can be a difficult topic,” but the fossil ammunition is responsible for 45% of the power company’s emissions reductions since 2005 as dirtier coal plants have been refunded. Good said electricity demand in North Carolina is growing at a pace not seen since the 1980s or 1990s.
“As we look at the next innumerable years trying to find a way to expand a system to approach this growth, I think natural gas has a role to play,” Wares said at the Columbia Global Energy Summit in New York City in April. The CEO said natural gas is needed as a “bridge nuclear fuel” until more advanced technology comes online.
“An all of the above strategy is the only thing that we see as the way to maintain the reliability and the affordability that our patrons count on,” Good said.