{"id":33086,"date":"2025-11-04T21:37:19","date_gmt":"2025-11-05T05:37:19","guid":{"rendered":"https:\/\/essential.construction\/news\/what-the-last-gas-boom-and-bust-says-about-todays-rush-to-build\/"},"modified":"2025-11-04T21:37:19","modified_gmt":"2025-11-05T05:37:19","slug":"what-the-last-gas-boom-and-bust-says-about-todays-rush-to-build","status":"publish","type":"post","link":"https:\/\/essential.construction\/news\/what-the-last-gas-boom-and-bust-says-about-todays-rush-to-build\/","title":{"rendered":"What the last gas boom (and bust) says about today\u2019s rush to build"},"content":{"rendered":"<p> [ad_1]<br \/>\n<\/p>\n<div>\n<div class=\"text-to-speech\">\n    <button class=\"text-to-speech__button button\"><br \/>\n        <img decoding=\"async\" class=\"text-to-speech__button__icon\" src=\"https:\/\/www.constructiondive.com\/static\/img\/play.svg?500116090725\" alt=\"-\"><br \/>\n        Listen to the article<br \/>\n        <span class=\"text-to-speech__button__audio-length\">13 min<\/span><br \/>\n    <\/button><\/p>\n<div class=\"text-to-speech__controls\">\n        <audio controls=\"\" class=\"js-text-to-speech\" preload=\"none\"><source src=\"https:\/\/text-to-speech.divecdn.com\/newspost\/804688\/2025-11-04_16.39.04\/gas-power-plant-boom-bust-data-center-ai-trump.wav\" type=\"audio\/mp3\"><\/source><\/audio><\/p>\n<div class=\"text-to-speech__controls__text\">\n            This audio is auto-generated. Please let us know if you have <a rel=\"nofollow noopener\" href=\"https:\/\/www.constructiondive.com\/contact\/\" target=\"_blank\">feedback<\/a>.\n        <\/div>\n<\/p><\/div>\n<\/div>\n<p><span><span><span><span><span><span>Twenty-five years ago, <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.nytimes.com\/1999\/12\/30\/business\/the-1.2-trillion-spigot-capital-spending-in-us-just-keeps-on-keeping-on.html?searchResultPosition=71\" target=\"_blank\"><span><span><span><span><span><span><span><span>a data center boom<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span> helped fuel a race to build gas-fired power plants, with the <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.nytimes.com\/2000\/04\/25\/nyregion\/energy-secretary-asserts-blackout-threat-is-rising.html?searchResultPosition=89\" target=\"_blank\"><span><span><span><span><span><span><span><span>energy secretary<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span>, utilities, politicians and experts warning of blackouts and economic stagnation if the country didn\u2019t meet surging demand for electricity.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>By 2001, however, the dot com bubble had burst, the economy was in recession and the huge demand increase never materialized. Efficiency and productivity improved rapidly, and demand remained more or less level for the next two decades, leaving many utilities with excess capacity and ratepayers footing the bill.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Some analysts and industry sources see parallels between then and now. Once again, headlines are warning of imminent energy shortfalls due largely to the power needs of artificial intelligence. Leading figures in government and industry are promoting more firm generation, and particularly gas, as a matter of economic and national security.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cCan the same thing happen? Definitely,\u201d said Eugene Kim, Wood Mackenzie\u2019s Americas Gas Research team director. \u201cThe utilities and anyone planning for power demand is forecasting unprecedented and, in some cases, even exponential growth. Whether that materializes or not \u2013 huge degree of uncertainty.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<h3 class=\"standard-heading\"><span><span><span><span><span>Gas investment reaches new heights<\/span><\/span><\/span><\/span><\/span><\/h3>\n<p><span><span><span><span><span><span><span>Investment firms, utilities, tech giants, energy companies and others are pouring billions into acquiring existing gas plants or developing new ones to serve data centers. <\/span>Gas power merger and acquisition valuations have doubled since 2024, reaching up to $1.93 million\/MW in some markets, according to energy analytics firm Enverus.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>While there are echoes of the millennium today, there are a few important differences.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>The first is that the U.S. is producing and consuming more gas than ever before \u2014 driven largely by the rise of fracking \u2014 with production concentrated in Texas and Louisiana to the south, and Pennsylvania and West Virginia farther north.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Secondly, as the U.S. became a gas-producing powerhouse, the gas and electric power sectors have become much more interdependent. In 2000,\u00a0the electric power sector accounted for <a rel=\"nofollow noopener\" href=\"https:\/\/www.eia.gov\/energyexplained\/natural-gas\/use-of-natural-gas.php#:~:text=Also%20in%20Hydrogen%20explained%20*%20Natural%20gas,Tcf14%25%20*%20commercial3.31%20Tcf10%25%20*%20transportation1.27%20Tcf4%25\" target=\"_blank\">about 22% percent of U.S. gas consumption<\/a>, while gas accounted for<span><span> <\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.eia.gov\/energyexplained\/electricity\/electricity-in-the-us-generation-capacity-and-sales.php#:~:text=Changes%20in%20energy%20sources%20for,year%20because%20of%20precipitation%20patterns.\" target=\"_blank\"><span><span><span><span><span><span><span><span>around 16%<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span><a rel=\"nofollow noopener\" href=\"https:\/\/www.eia.gov\/energyexplained\/electricity\/electricity-in-the-us-generation-capacity-and-sales.php#:~:text=Changes%20in%20energy%20sources%20for,year%20because%20of%20precipitation%20patterns.\" target=\"_blank\"> <\/a>of electricity produced, according to the U.S. Energy Information Administration.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>By 2023, <a rel=\"nofollow noopener\" href=\"https:\/\/www.eia.gov\/energyexplained\/natural-gas\/use-of-natural-gas.php#:~:text=Also%20in%20Hydrogen%20explained%20*%20Natural%20gas,Tcf14%25%20*%20commercial3.31%20Tcf10%25%20*%20transportation1.27%20Tcf4%25\" target=\"_blank\">the electric power sector<\/a><\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.eia.gov\/energyexplained\/natural-gas\/use-of-natural-gas.php#:~:text=Also%20in%20Hydrogen%20explained%20*%20Natural%20gas,Tcf14%25%20*%20commercial3.31%20Tcf10%25%20*%20transportation1.27%20Tcf4%25\" target=\"_blank\">\u00a0accounted for about 40%<\/a> of total U.S. natural gas consumption, and<span><span><span><span><span><span>\u00a0gas accounted for about <a rel=\"nofollow noopener\" href=\"https:\/\/www.eia.gov\/energyexplained\/natural-gas\/use-of-natural-gas.php#:~:text=Also%20in%20Hydrogen%20explained%20*%20Natural%20gas,Tcf14%25%20*%20commercial3.31%20Tcf10%25%20*%20transportation1.27%20Tcf4%25\" target=\"_blank\">42% to 43% <\/a>of utility-scale electricity generation, making it the single largest fuel source, the EIA says<\/span><\/span><\/span><\/span><\/span><\/span>.\u00a0<span><span><span><span><span><span>Over the years, the role of gas has grown, largely displacing coal as the latter became uneconomical.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<figure class=\"inside_story\">\n<div class=\"figure_content\">\n<div><img decoding=\"async\" alt=\"A data center under construction at night.\" data-imagemodel=\"187323\" src=\"https:\/\/imgproxy.divecdn.com\/QgE7Eh6wgKu1gp6N5qGLNZ7V-EobUwoxW4d3lBV6kAk\/g:ce\/rs:fit:1600:0\/Z3M6Ly9kaXZlc2l0ZS1zdG9yYWdlL2RpdmVpbWFnZS82STVBMjU2Ny5qcGc=.webp\"\/><\/div>\n<\/div><figcaption class=\"inside_story_caption\">\n<p>DataBank&#8217;s IAD4 data center under construction in Ashburn, Virginia.<\/p>\n<p>Diana DiGangi\/Utility Dive<\/p>\n<p>\u00a0<\/p>\n<\/figcaption><\/figure>\n<p><span><span><span><span><span><span>The third key difference is the rise of renewables and storage on a large scale. While gas is the dominant source of fuel for U.S. power generation, <span>it makes up a small fraction of new generation coming online this year, and energy storage is taking a small but growing share of daily peak demand when the sun goes down. Utility-scale wind and solar account <a rel=\"nofollow noopener\" href=\"https:\/\/www.utilitydive.com\/news\/new-capacity-coal-wind-solar-gas-2025-ferc-trump\/761590\/\" target=\"_blank\">for 83% of FERC\u2019s \u201chigh probability\u201d additions<\/a> through July 2028, while gas makes up about 16%.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span><span>There is some evidence that could change.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span><span>The outlook for renewables has dimmed since President Donald Trump came to office this year and largely made good on his promises to repeal tax credits, permits and other government support for wind and solar while throwing his weight behind fossil fuels.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Scott Wilmot, an energy analyst at Enverus, said before the passage of the <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.utilitydive.com\/news\/house-passes-senate-megabill-trump-ira-tax-credit\/752276\/\" target=\"_blank\">One Big Beautiful Bill Act<\/a>\u00a0in July<span><span><span><span><span><span>, he would have said the quality and size of the renewable project pipeline was more than enough to meet projected energy demands. Now, he\u2019s not so sure.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cThe reality is the [levelized cost of electricity] for these renewable projects has gone up without those tax credits,\u201d he said. \u201cA lot of folks who are developing these projects are probably reconsidering a lot of their pipeline.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<section class=\"storylines-carousel-wrapper hide-small show-large\" id=\"desktop-carousel\"\/>\n<p><span><span><span><span><span><span>T<span>he PJM interconnection, the nation&#8217;s largest grid operator, <\/span><\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.utilitydive.com\/news\/pjm-resource-reliability-rri-gas-interconnection\/747090\/\" target=\"_blank\"><span><span><span><span><span><span><span>is fast tracking 11.8 GW of generation<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span><span>, mostly from gas. Gas also <\/span><\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.utilitydive.com\/news\/miso-eras-fast-track-interconnection-review\/758718\/\" target=\"_blank\"><span><span><span><span><span><span><span>dominated <\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><a rel=\"nofollow noopener\" href=\"https:\/\/www.utilitydive.com\/news\/miso-eras-fast-track-interconnection-review\/758718\/\" target=\"_blank\"><span><span><span><span><span><span><span>MISO<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span><span>&#8216;s<\/span><\/span><\/span><\/span><\/span><\/span><\/span><span><span><span><span><span><span><span> fast track interconnection review, accounting for 19 GW out of 26 GW. In ERCOT, gas went from 6.8% of the interconnection queue in August 2024 to 9.1% as of August 2025.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span><span>At the same time, major gas pipeline expansions are planned or proposed. <\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p>Amy Andryszak, president and CEO of the Interstate National Gas Association of America, said existing pipelines are currently running at capacity, and her organization\u2019s members are reporting a \u201crecord number\u201d of inquiries for new\u202fpipelines from potential customers.\u202f<\/p>\n<p>\u201cThey indicate they have not seen this level of interest in building since around 2010 when the fracking boom drove interest in\u202fpipeline\u202fdevelopment,\u201d\u00a0Andryszak said in an emailed statement. \u201cMany members are already announcing new or revived\u202fpipeline\u202fprojects, and we expect many more will file for certificates at [the Federal Energy Regulatory Commission] over the next 18 months.\u201d<\/p>\n<p><span><span><span><span><span><span><span>FERC is expected to issue guidance soon on <a rel=\"nofollow noopener\" href=\"https:\/\/www.utilitydive.com\/news\/ferc-pjm-colocation-rules-data-centers-talen-constellation\/744071\/\" target=\"_blank\">colocation rules<\/a>, which could potentially make it easier to route gas directly to data centers and other large loads.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span><span>What would be the largest gas-fired power plant in the country is a <a rel=\"nofollow noopener\" href=\"https:\/\/www.utilitydive.com\/news\/homer-city-gas-fired-power-station-data-center-firstenergy\/744332\/\" target=\"_blank\">4.5 GW project being developed by Knighthead Capital Management<\/a>\u00a0at the former Homer City coal plant in Pennsylvania as part of a 3,200-acre data center campus.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<figure class=\"inside_story\">\n<div class=\"figure_content\">\n<div><img decoding=\"async\" alt=\"A gray white and data center seen next to power lines against a twilight sky.\" data-imagemodel=\"187268\" src=\"https:\/\/imgproxy.divecdn.com\/FGGDev7lKYhcrBZIkU7HzSzEq1M3OMTTucx3sFwRqCU\/g:ce\/rs:fit:1600:0\/Z3M6Ly9kaXZlc2l0ZS1zdG9yYWdlL2RpdmVpbWFnZS82STVBMjUyNl95YkNJTGFZLmpwZw==.webp\"\/><\/div>\n<\/div><figcaption class=\"inside_story_caption\">\n<p>A Google data center in Ashburn, Virginia, located down the street from the Potomac Energy Center, a 774-MW natural gas plant.<\/p>\n<p>Diana DiGangi\/Utility Dive<\/p>\n<p>\u00a0<\/p>\n<\/figcaption><\/figure>\n<p><span><span><span><span><span><span><span>Some developers say even without data centers, electricity demand is rising and gas, which is firm, dispatchable and proven, will be an important part of the energy mix for decades to come, especially as more coal generation retires.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<section class=\"storylines-carousel-wrapper show-small hide-large\" id=\"mobile-carousel\"\/>\n<p><span><span><span><span><span><span>Bilal Khan is an executive at Blackstone who oversaw the firm\u2019s recent acquisition of the <span><span>620-MW natural gas power plant Hill Top Energy Center in Pennsylvania<\/span>\u00a0for <a rel=\"nofollow noopener\" href=\"https:\/\/www.utilitydive.com\/news\/blackstone-billion-pennsylvania-natural-gas-plant-data-centers-ai\/760243\/\" target=\"_blank\">about $1,600\/kW<\/a><\/span>. The state is part of PJM, which is already setting <a rel=\"nofollow noopener\" href=\"https:\/\/www.utilitydive.com\/news\/pjm-interconnection-capacity-auction-prices\/753798\/\" target=\"_blank\">record capacity auction prices<\/a>, making it an attractive market for producers. The grid operator has said that is due to supply and demand conditions, but its independent market monitor says data centers are the \u201c<a rel=\"nofollow noopener\" href=\"https:\/\/www.utilitydive.com\/news\/data-centers-pjm-capacity-auction-market-monitor\/801780\/\" target=\"_blank\">primary reason<\/a>\u201d for the price surge.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><a rel=\"nofollow noopener\" href=\"https:\/\/www.utilitydive.com\/news\/blackstone-billion-pennsylvania-natural-gas-plant-data-centers-ai\/760243\/\" target=\"_blank\"><span><span><span><span><span><span>Khan<\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span> said that even putting aside data centers, he\u2019s bullish on natural gas thanks to the other factors driving increased power demand, including manufacturing and electrification.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cWe still need new power supply that&#8217;s reliable, consistent and affordable,\u201d Khan said. \u201cThis moment is unique and in contrast to the last approximately 20 years when power demand was flat.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<h3 class=\"standard-heading\"><span><span><span><span><span><span>A risky investment<\/span><\/span><\/span><\/span><\/span><\/span><\/h3>\n<p><span><span><span><span><span><span>Khan acknowledged, however, that new natural gas plants face significant obstacles. The backlog for new turbines, for example, can stretch up to <a rel=\"nofollow noopener\" href=\"https:\/\/www.utilitydive.com\/news\/mitsubishi-gas-turbine-manufacturing-capacity-expansion-supply-demand\/759371\/\" target=\"_blank\">seven years<\/a> amid global competition for those and other components like transformers.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cThere&#8217;s an equipment shortage, there&#8217;s a labor shortage and it\u2019s more challenging to obtain all necessary permits,\u201d Khan said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>And the cost of deploying new gas generation is rising fast.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>According to Enverus, capital costs for new natural gas power plants now average $2,200\/kW to $3,000\/kW. An <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.utilitydive.com\/news\/natural-gas-energy-affordability-gridlab\/803619\/\" target=\"_blank\"><span><span><span><span><span><span><span><span>analysis by GridLab<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span> adds another<span> $1,500\/kW levelized for the 20-year cost of fuel and $500\/kW for pipeline infrastructure, putting the cost of new gas generation at $4,000\/kW to $4,500\/kW.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Kevin Smith, CEO of Arevon Energy, spent years working on natural gas projects alongside nuclear and renewables before transitioning to focus on renewables exclusively. He suggested there was a ceiling to how much gas could be built to meet near-term demand given the prices, pipeline constraints and interconnection queues.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cTens of gigawatts of new generation from natural gas is likely at least five years away, if not more,\u201d Smith said.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p>Changing market dynamics also mean new gas-powered generators face tighter conditions under which they would be economical to run,\u00a0according to a <a rel=\"nofollow noopener\" href=\"https:\/\/www.ascendanalytics.com\/blog\/why-thermal-generation-must-maximize-flexibility-and-availability?utm_medium=owned_social&amp;utm_source=linkedin+post&amp;utm_campaign=capacity+paper+thermal+spin+off+li+post&amp;utm_content=thermal+publication+p\" target=\"_blank\">recent report on thermal generation from Ascend Analytics<\/a>.<\/p>\n<p>Their competitiveness depends on the type of gas generation technology, which varies by efficiency, availability, ramp rate, cold startup cost and other factors. But overall, Ascend said, the value of gas assets will become increasingly concentrated in \u201cnarrow, infrequent windows of time,\u201d increasing the importance of availability, secure fuel supply and strategically-scheduled preventative maintenance.<\/p>\n<figure class=\"inside_story\">\n<div class=\"figure_content\">\n<div><img decoding=\"async\" alt=\"Comparison of typical cost and flexibility characteristics for various gas generation technologies\" data-imagemodel=\"188871\" src=\"https:\/\/imgproxy.divecdn.com\/wIvl8djUrg9rUZs01tB0nylwrAbx7aV9mZsekUScgg4\/g:ce\/rs:fit:1600:0\/Z3M6Ly9kaXZlc2l0ZS1zdG9yYWdlL2RpdmVpbWFnZS9Bc2NlbmRfQW5hbHl0aWNzX2dhc19nZW5lcmF0aW9uLmpwZw==.webp\"\/><\/div>\n<\/div><figcaption class=\"inside_story_caption\">\n<div class=\"caption_text\">Comparison of typical cost and flexibility characteristics for various gas generation technologies:\u00a0Natural Gas Combined Cycle, Natural Gas Combustion Turbine, NGCT Aeroderivative, and Reciprocating Internal Combustion Engine plants.\u00a0From Ascend Analytics\u2019 <a rel=\"nofollow noopener\" href=\"https:\/\/www.ascendanalytics.com\/blog\/why-thermal-generation-must-maximize-flexibility-and-availability?utm_medium=owned_social&amp;utm_source=linkedin+post&amp;utm_campaign=capacity+paper+thermal+spin+off+li+post&amp;utm_content=thermal+publication+p\" target=\"_blank\">report on thermal generation<\/a>.\u200b\u200b\u200b\u200b<\/div>\n<p>Permission granted by Ascend Analytics<\/p>\n<p>\u00a0<\/p>\n<\/figcaption><\/figure>\n<p>\u201cIn the face of rising electricity demand and declining capacity accreditation for renewables and storage, the need for dispatchable, long-duration capacity resources will persist. To meet this need, new gas capacity will be built,\u201d it concluded.\u00a0\u201cHowever, investments in new gas should be made cautiously, prudently, and strategically. Thermal generation will remain a risky investment, with stranded asset risks not going away.\u201d<\/p>\n<h3 class=\"standard-heading\">Have utilities learned their lesson?<\/h3>\n<p><span><span><span><span><span><span>Against a backdrop of rising residential power bills, utilities and regulators say they are taking precautions to protect ratepayers from the possibility of a bubble. <\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>NRG Energy\u2019s vice president of regulatory affairs, Travis Kavulla, said past experience has formed the industry\u2019s current approach in which competitive generators carry the risk of load forecasts \u2013 at least in deregulated markets.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cAll of that has ramifications for the extent to which people are comfortable rapidly building out generation,\u201d he said during a recent panel discussion hosted by the Heritage Foundation. \u201cThat&#8217;s why it&#8217;s so important for long-term offtake agreements to be formalized in this industry.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Some regulators and utilities are moving to place more of the risk on hyperscalers by creating new rate classes for large loads.\u00a0At least 30 states have proposed or approved large-load tariffs over the past several years to manage growth and protect existing ratepayers, according to <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/sepapower.org\/large-load-tariffs-database\/\" target=\"_blank\">a database<\/a>\u00a0from the North Carolina Clean Energy Technology Center and the Smart Electric Power Alliance.<\/p>\n<div class=\"pullquote\">\n<hr\/>\n<div class=\"pq-hr-wrapper\">\n<p class=\"pq-quote\">\u201cWhether those power plants or the gas pipeline go underutilized because that boom didn\u2019t realize is yet to be determined.\u201d<\/p>\n<div class=\"pq-headshot\"><img decoding=\"async\" alt=\"-\" class=\"pq-headshot-img-hidden\" src=\"https:\/\/d12v9rtnomnebu.cloudfront.net\/diveimages\/corporate_site\/teampage\/square_profiles\/placeholder-200.png\"><\/div>\n<div class=\"pq-speaker-details\">\n<p class=\"pq-speaker\">Eugene Kim<\/p>\n<p class=\"pq-speaker-title\">Wood Mackenzie\u2019s Americas Gas Research team director<\/p>\n<\/div>\n<\/div>\n<hr\/>\n<\/div>\n<p><span><span><span><span><span><span><span>The Ohio Public Utilities Commission <\/span><\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.utilitydive.com\/news\/Ohio-regulators-approve-aep-data-center-interconnection-rules\/752690\/\" target=\"_blank\"><span><span><span><span><span><span><span><span><span>recently approved AEP Ohio\u2019s<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span><span> plan to make data centers pay for at least 85% of the energy<span><span><span><span><span><span> <\/span><\/span><\/span><\/span><\/span><\/span>they request, even if they use less, to cover the cost of infrastructure. It also requires data centers to show they are financially viable and to pay an exit fee if their project is canceled or they can\u2019t meet obligations.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span><span>Since then, the utility said its <a rel=\"nofollow noopener\" href=\"https:\/\/www.datacenterdynamics.com\/en\/news\/aep-ohio-slashes-data-center-pipeline-by-more-than-half-report\/\" target=\"_blank\">data center pipeline has shrunk by half<\/a> \u2014 a positive development, said <\/span>Wilmot from Enverus.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cWe just can&#8217;t have absolutely unmitigated data center demand growth,\u201d he said. \u201cOtherwise, things are going to be very challenging for the ratepayer.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Dominion Energy, which serves the area around Ashburn, Virginia \u2013 home to the highest concentration of data centers in the world \u2014 has proposed a similar tariff. Under its proposal, large load customers would be required to make a 14-year commitment to pay for the power they request regardless of how much they actually use.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Aaron Ruby, spokesperson for Dominion, said the utility is focused on making sure residential customers aren\u2019t subsidizing the cost of infrastructure needed by data center customers and has yet to encounter delays as it pursues 5.9 GW of new gas generation.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>He suggested, however, that there was little danger of overbuilding. In the last 20 years, he could only recall one example of Dominion developing infrastructure for a data center that fell through.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cWithin a year or two, another data center customer emerged and fully utilized the infrastructure,\u201d he said.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Others expressed skepticism.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Abe Silverman, an assistant research scholar with Johns Hopkins University\u2019s Ralph O\u2019Connor Sustainable Energy Institute, said it was still very early to know what effects AI will have on power consumption.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cThis is a baby industry, and we are building and paying for infrastructure today for data centers that don&#8217;t yet exist,\u201d he said. \u201cWe are making an investment to build out that grid infrastructure based on these very frothy assumptions.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<figure class=\"inside_story\">\n<div class=\"figure_content\">\n<div><img decoding=\"async\" alt=\"A white data center under construction is seen under a night sky with stars.\" data-imagemodel=\"187273\" src=\"https:\/\/imgproxy.divecdn.com\/OHByn804XVLGf5Txe91hM-7MizuJYUpbgA-YT66xK8o\/g:ce\/rs:fit:1600:0\/Z3M6Ly9kaXZlc2l0ZS1zdG9yYWdlL2RpdmVpbWFnZS82STVBMjY0Mi5qcGc=.webp\"\/><\/div>\n<\/div><figcaption class=\"inside_story_caption\">\n<p>DataBank&#8217;s IAD4 data center under construction in Ashburn, Virginia.<\/p>\n<p>Diana DiGangi\/Utility Dive<\/p>\n<p>\u00a0<\/p>\n<\/figcaption><\/figure>\n<p><span><span><span><span><span><span>Kim, the Wood Mackenzie gas researcher, suggested that the power industry has matured since the last bubble burst.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Back then, the three dominant gas turbine manfacturers \u2014 GE Vernova, Mitsubishi and Seimens \u2014 were \u201cburned significantly,\u201d he said.\u00a0\u201cThe utilities were burned significantly by overbuilding, and now they\u2019re more cautious.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Kim predicted gas generation will likely continue to increase due to coal retirements and growing demand for electricity, with or without data centers. Advanced manufacturing facilities require more energy. Summers are getting hotter as the climate changes, increasing demand for cooling, and larger renewable portfolios will require <span>dispatchable<\/span> generation that cannot currently be replaced by storage, he added.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>But an economic slump, technological innovation, improved efficiency and any number of unforeseen factors could impact what is still a highly speculative growth scenario, he said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cNevertheless, as pipelines could take two years to build, four years to build, you then have to start building those pipelines if you\u2019re going to build that power plant and support it,\u201d Kim said. \u201cWhether those power plants or the gas pipeline go underutilized because that boom didn\u2019t realize is yet to be determined.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<\/p><\/div>\n<p>[ad_2]<br \/>\n<br \/><a href=\"https:\/\/www.constructiondive.com\/news\/gas-power-plant-boom-bust-data-center-ai-trump\/804688\/\" rel=\"nofollow noopener\" target=\"_blank\">This article was originally posted at Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>[ad_1] Listen to the article 13 min This audio is auto-generated. Please let us know if you have feedback. Twenty-five &#8230; <a title=\"What the last gas boom (and bust) says about today\u2019s rush to build\" class=\"read-more\" href=\"https:\/\/essential.construction\/news\/what-the-last-gas-boom-and-bust-says-about-todays-rush-to-build\/\" aria-label=\"Read more about What the last gas boom (and bust) says about today\u2019s rush to build\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[457],"tags":[],"class_list":["post-33086","post","type-post","status-publish","format-standard","hentry","category-construction-dive","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33"],"_links":{"self":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/posts\/33086","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/comments?post=33086"}],"version-history":[{"count":0,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/posts\/33086\/revisions"}],"wp:attachment":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/media?parent=33086"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/categories?post=33086"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/tags?post=33086"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}