The AI Race's Insatiable Energy Appetite
The artificial intelligence boom has grown so frenzied that, by 2035, U.S. data centers are projected to consume more natural gas than Germany and Japan combined.
A Dramatically Revised Forecast
Over the next decade, data centers are expected to become the second-strongest driver of natural gas demand growth, surpassed only by LNG exports. According to a new report from BloombergNEF, these facilities could consume approximately 18 billion cubic feet per day β nearly double what the organization predicted just nine months ago.
The updated forecast accounts for the likelihood that not all announced data center projects will ultimately be completed.
On-Site Power Generation: Headlines vs. Reality
Data centers that generate power on-site have dominated recent headlines, with Meta, Microsoft, Google, and Amazon all announcing plans for new natural gas power plants designed to bypass the electrical grid entirely.
By 2035, these projects are expected to consume between 2.9 billion and 3.4 billion cubic feet per day β roughly equivalent to what all data centers consume today, including the natural gas used to generate grid power.
However, according to BloombergNEF, on-site-powered data centers represent only a fraction of overall demand growth.
The Grid's Hidden Burden
The real story lies in grid-connected data centers. By the middle of the next decade, these facilities are predicted to drive an additional 15 billion cubic feet per day of natural gas consumption by the power sector. To put that in perspective, that's five times more demand growth through 2035 than from all other grid-connected sectors combined.
If this staggering demand growth materializes, it could push natural gas prices higher.
Price Pressures and Utility Ratepayers
Much of today's data center buildout relies on stable natural gas prices, which have prevailed in recent years. But analysts at Noreva believe that may be a false hope. The combined impact of the data center boom and rising LNG exports could cause prices to soar. Even if technology companies' balance sheets can absorb such a surge, utility ratepayers may not be able to.
Climate Impact: A Growing Concern
Then there's the climate impact.
According to the International Energy Agency, burning one cubic foot of natural gas releases the equivalent of 60 grams of carbon dioxide into the atmosphere, including emissions from extraction, processing, and distribution. The additional demand from data centers would generate 1 million metric tons more greenhouse gas pollution daily β approximately 12% of total U.S. greenhouse gas emissions today.
via TechCrunch AI