The current surge in data center construction in the United States is causing challenges in securing enough power to meet the demands of AI workloads. Many facilities designed for artificial intelligence tasks require levels of electrical capacity that exceed what local grids can currently provide. As a response to this issue, several data center operators and commissioning companies are beginning to invest in dedicated power generation, often utilizing natural gas purchased directly from producers.
A consortium led by Babcock & Wilcox, Base Electron, and Applied Digital has announced plans to build gas-fired generators to support new AI data center campuses in North Dakota, with a project value of $2.4 billion. Babcock & Wilcox will be responsible for designing and constructing four gas turbine units, which will deliver 1.2 gigawatts of on-site generation.
This level of power output is equivalent to that of an average nuclear reactor. The project is aimed at directly supporting AI computing needs, with the potential for additional gas-fired generation to be added in future development phases. The availability of electricity is a critical factor in determining the revenue potential of AI processing capabilities.
The International Energy Agency predicts a significant increase in global electricity consumption by data centers in the coming years, with natural gas expected to supply a considerable portion of the demand. While renewable energy capacity is growing rapidly, the preference for reliable power sources makes natural gas a more suitable option for facilities with consistently high computational loads.
North America is currently leading the way in data center construction, with substantial capacity under development. If all planned projects are completed and rely primarily on gas generation, US natural gas demand could see a significant increase by 2030. Energy producers are adjusting their operations to meet the growing demand, with companies like Comstock Resources focusing on regions where new data center developments are taking place.
Data center operators are increasingly entering into direct supply agreements with gas producers to ensure a stable fuel supply and mitigate electricity price fluctuations. Public policy in the US supports the idea of keeping power generation local to avoid putting strain on existing grids. Technology giants like Amazon, Google, and Microsoft have committed to financing new generation capacity and infrastructure upgrades to support their data center operations.
Overall, access to power is becoming a critical factor for data center operators, especially as AI workloads continue to grow. Securing dedicated power generation can provide a competitive advantage in a market where electricity availability is crucial. As the demand for artificial intelligence services increases, the relationship between energy supply and computing capacity will play a significant role in shaping the industry’s future.
