How US data centers could push natural gas prices higher
What's the story
A recent report by BloombergNEF has revealed that US data centers are projected to consume more natural gas than Germany and Japan combined by 2035. The AI race is driving this unprecedented demand growth, with data centers projected to be the second-largest contributor to natural gas demand growth after LNG. The facilities are expected to consume some 18 billion cubic feet per day of natural gas by 2035, almost double what BloombergNEF predicted nine months ago.
Corporate impact
Tech giants' natural gas power plants
Tech giants like Meta, Microsoft, Google, and Amazon have been making headlines with their plans for new natural gas power plants.
These facilities will bypass the grid and produce power onsite to meet their growing data needs.
By 2035, these projects are expected to consume between 2.9 billion and 3.4 billion cubic feet per day of natural gas, roughly as much as all data centers consume today, including natural gas used to generate power for the grid.
Future projections
Impact on natural gas prices
Grid-connected data centers are expected to drive an additional 15 billion cubic feet per day of natural gas consumption by the power sector by the middle of the next decade.
This is five times more demand growth through 2035 than from all the other grid-connected sectors combined, according to BloombergNEF.
Price concerns
Concerns over rising utility rates
The data center boom and rising LNG exports could push natural gas prices higher, according to Noreva analysts.
This is a major concern as much of today's data center buildout relies on stable natural gas prices.
Even if tech companies can handle such a price surge financially, utility ratepayers might not be able to cope with the increased costs.
Environmental concerns
Environmental implications of increased natural gas consumption
The IEA estimates that burning one cubic foot of natural gas emits 60g of carbon dioxide into the atmosphere, including extraction, processing, and distribution.
The additional demand from data centers will add an extra one million metric tons of greenhouse gas pollution every day. This is about 12% of total US greenhouse gas emissions today.
The surge in natural gas consumption raises questions about the sustainability of this digital growth.