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Mar 24, 2025 - Data Center Boom Speeds Natural Gas Projects

• In February, the Federal Energy Regulatory Commission (FERC) approved a proposal by grid operator PJM Interconnection to expedite the process of bringing more power plants online amid rapid growth in power demand by data centers, according to Bisnow. Utilities and grid operators are increasingly looking to natural gas plants as the quickest way to bring new electricity capacity online. By 2030, data center electricity demand could drive 50 gigawatts of new natural gas generation capacity, increasing power-sector gas demand by nearly 17%, according to S&P Global. FERC’s approval will allow PJM to speed up the review process for up to 50 new power plants, most of which are gas-fired. The expedited reviews hope to avoid future capacity shortages as data center power demand increases. Some data center projects are being sited near or co-sited with gas power plants and bypassing grid connections.
• US electricity generation capacity additions in 2025 are expected to be led by solar and battery storage projects, according to the US Energy Information Administration (EIA). The US is projected to add 63 gigawatts (GW) of generating capacity in 2025, led by utility-scale solar with 32.5 GW, followed by battery storage (18.2 GW), wind (7.7 GW), and natural gas (4.4 GW). Additions in Texas (11.6 GW) and California (2.9 GW) will account for nearly half of the solar capacity additions in 2025. Other states that are expected to have significant upticks in solar additions in 2025 include Arizona, Florida, Indiana, Michigan, and New York.

• On March 12, the EPA said it aims to roll back many regulations related to air, water, and waste that affect power plants, according to Utility Dive. However, research firm Capstone suggests that current and future litigation could prevent any changes from going into effect before the next presidential administration. The EPA intends to take interim steps to reduce regulations sooner, including a possible two-year exemption for power facilities impacted by EPA mercury and air toxin standards while the official rulemaking policy plays out. The EPA also hopes to reconsider several other power-related regulations, including ambient air quality standards for soot, a rule that regulates ozone from drifting into other states, regulation of how coal ash is handled, and power plant effluent rules.
• A lack of coordination between data center operators on one side and power utilities and grid operators on the other is increasing the chances of wide-scale power outages, according to reporting by Reuters in March. In July, 60 data centers outside Washington DC – an area known as Data Center Alley - fell off the grid and switched to on-site generators. The data centers suddenly leaving the grid caused a massive surge in available electricity and the local utility and grid operator had to quickly reduce output by power plants to protect grid equipment and prevent possible cascading outages. To avoid service interruptions, data centers are designed to switch to generator power at the smallest sign of grid trouble, according to the North American Electric Reliability Corporation (NERC). In the case of July’s Data Center Alley event, the grid trouble was caused by a faulty surge protector on a power line. NERC suggests the risks of outages will only increase as more data centers come online. Regulators could require data centers to ride out dips in voltage, but that may prompt them to move to states with fewer regulations, according to the director of Harvard’s Electricity Law Institute. Data center operators say voltage fluctuations can cause costly damage to electronic and cooling equipment.