In the tech industry, fear of missing out (FOMO) has been a driving force throughout various trends, with the AI boom currently taking centre stage. This surge in AI is prompting significant investments in infrastructure, particularly in natural gas power plants, as companies scramble to meet the escalating energy demands of data centres.
Recent announcements reveal a striking trend: Microsoft is collaborating with Chevron and Engine No. 1 to develop a 5-gigawatt natural gas plant in West Texas. Google confirmed it is working with Crusoe on a 933-megawatt facility in North Texas, and Meta added even more natural gas plants to its Hyperion data centre in Louisiana, boosting its capacity significantly. The concentration of these investments in the southern U.S. hinges on the region’s abundant natural gas reserves, which the U.S. Geological Survey estimates could fulfil national energy needs for ten months alone.
However, this rush for natural gas resources is causing equipment shortages, notably in turbines crucial for power generation. Projections indicate that turbine prices may rise by nearly 195% from 2019 levels, with new orders being delayed until 2028 due to a backlog in production. This situation illustrates the industry’s reliance on natural gas to sustain the AI-driven future.
Yet, while companies bet on the continued demand for energy generated from natural gas, industry experts caution against such assumptions. Though natural gas is currently plentiful in the U.S., production growth from major shale gas regions has significantly slowed, creating uncertainty about long-term supply stability. Moreover, fluctuations in natural gas prices can directly impact electricity costs, which constitute about 40% of U.S. energy output.
Technology firms may attempt to mitigate their exposure by establishing power plants that operate independently from the grid, thereby easing pressure on public infrastructure. However, if their energy consumption continues to mushroom, these operations could inadvertently exacerbate energy prices, affecting not just households but also industries that critically depend on reliable natural gas supplies.
Furthermore, unforeseen weather events can dramatically alter supply dynamics, as history has shown in situations like Texas’ 2021 freeze. When energy demand peaks due to extreme weather, companies must choose between maintaining AI data centres or providing essential energy for heating homes.
While tech corporations may assert they are sourcing their own power and not burdening the grid, this merely shifts strain from one infrastructure to another. The current AI push highlights the finite nature of energy resources and raises questions about the sustainability of such heavy investments in natural gas. Ultimately, these companies may find themselves regretting their choices driven by FOMO, as the constraints of the physical energy landscape become ever more apparent.
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