In a sweeping shift, the data center industry is witnessing a surge in investments and strategic partnerships focused on natural gas, driven by the insatiable energy demands of AI and cloud computing. By February 2025, several pivotal initiatives have emerged, signaling a significant reorientation of the energy landscape.
ExxonMobil’s foray into the electricity market is a stark example of this trend. The oil giant plans to construct natural gas-fired power plants specifically to supply AI data centers, integrating carbon capture and storage (CCS) technology to mitigate emissions. This move isn’t just about meeting energy demands; it’s a strategic pivot by a traditional fossil fuel company into the low-carbon power sector, challenging the dominance of nuclear power and renewables. Such a shift could reshape energy markets, as more fossil fuel companies might follow suit, blurring the lines between traditional energy sectors and the burgeoning digital economy.
Midwestern data center developer Powerconnex Inc.’s initiative in Ohio underscores the urgency of meeting AI’s energy needs. The New Albany Energy Center, a 120 MW natural gas-fired power plant, is set to commence operations by Q1 2026, illustrating the swift pace at which the industry is moving to secure reliable power. This project highlights the growing trend of on-site power generation, which could decentralize energy distribution and challenge the status quo of grid-dependent data centers.
In Alberta, Canada, Crusoe and Kalina Distributed Power’s partnership to develop AI data centers powered by natural gas plants further emphasizes this trend. With three 170 MW gas-fired power plants backing these data centers, the agreement signals a deepening relationship between the natural gas industry and the digital sector. This kind of long-term commitment, structured around 15-year Power Purchase Agreements (PPAs), could stabilize energy markets and encourage more cross-sector investments.
Entergy’s plans in Louisiana, including a partnership with Meta to power a new AI data center, add another dimension to this energy transition. The proposal for three new natural gas power plants, generating over 2,200 MW, is contingent on regulatory approval. This highlights the critical role of policy in shaping the future of data center energy supply. Approval could catalyze similar projects, while rejection might prompt a reassessment of natural gas investments.
Oracle’s ambitious Stargate Project, committing up to $500 billion into AI infrastructure, is perhaps the most audacious example of this trend. With plans for substantial natural gas turbine plants, this venture could significantly boost demand for natural gas, influencing global energy markets. Moreover, the collaboration between tech giants and energy providers could foster innovative business models, reshaping how energy is procured and consumed.
Meanwhile, European players like Naturgy, EDF, and EnBW are making significant strides. Naturgy’s expansion of renewable gas injection capacity in the Iberian Peninsula positions the company as a leader in green gas production, challenging the notion that natural gas is merely a transition fuel. EDF’s identification of sites for data centers in France, and EnBW’s advocacy for new gas-fired power plants in Germany, underscore Europe’s strategic approach to balancing energy security, sustainability, and digital growth.
The cumulative planned capacity from these developments, excluding undisclosed figures, amounts to approximately 24.695 GW. This substantial figure hints at the scale of the data center industry’s energy ambitions and the pivotal role natural gas is set to play. However, the environmental implications are complex. While natural gas is cleaner than coal, its increased use raises concerns about methane emissions and the potential displacement of renewable energy sources.
As the data center industry’s energy demands continue to soar, these developments pose intriguing questions. Will the shift towards natural gas be a stepping stone to a renewable future, or a diversion from it? How will policymakers balance energy security with climate goals? And how will these investments reshape the competitive dynamics of both the energy and digital sectors? One thing is clear: the data center industry is no longer a passive consumer of energy; it’s an active force shaping the energy landscape. As AI and cloud computing continue to grow, so too will the industry’s influence on energy markets, policy, and sustainability debates. This interplay between digital and energy sectors is set to spark compelling discussions and drive innovative solutions, as the world
