US LNG Exporters May Face Strain from Rising AI Energy Demands
The US race to AI dominance might have an unforeseen consequence, it might stretch the US liquefied natural gas (LNG) exporters. Though the US is home to some of the world's largest natural gas reserves, the sudden surge in electricity demand, fueled by the expansion of artificial intelligence (AI) might take a heavy toll on America's power grids and infrastructure, according to a report by Reuters. This increase in demand may drive natural gas prices up, possibly impacting the economics of LNG facilities.
The Increasing Power Requirements of Data Centers
Technol giants like Meta, Google, Amazon, and Microsoft are investing billions of dollars in data centers for the development and deployment of AI models that are very power-intensive. According to the International Energy Agency (IEA), the percentage of US data center electricity demand will increase from 6% as of now to 13% by the year 2030, which is close to half of the total increase in electricity demand between that time.
As per the IEA, US data center electricity demand is projected to increase by about 240 terawatt-hours (TWh), which is equivalent to the entire world's data center electricity demand in 2022 between 2024 and 2030. Of this increase, natural gas is expected to supply over 130 TWh.
Also read: ArcusAI Launches AI Platform to Facilitate Grid Interconnection for Clean Energy Projects
Natural Gas: A Critical Component of Data Center Energy Needs
According to Reuters, data centers are required to meet stringent “five-nines” uptime standards, meaning they must run 99.999% of the time. This high demand for reliability makes energy security and stability essential.
As a result, while many tech companies are investing in low-carbon energy sources like renewables and nuclear, they are also relying on natural gas to ensure stable power supply. Natural gas already meets 40% of the electricity needs for data centers.
The Rise of Gas-Powered Data Centers
Reuters reports that many new data centers are being built near gas power plants to ensure reliable energy supply. For example, the Abilene, Texas-based data center, central to the $500 billion Stargate project backed by OpenAI, SoftBank, and Oracle will be powered by a mix of renewables and new gas power plants being developed nearby.
This reflects a broader trend where gas-powered plants are increasingly positioned near data centers to meet their massive and uninterrupted power needs, as noted by Zach Krause from East Daley Analytics.
