Powering the Data Center boom

Shane Mullins, Vice President of Product Development Energy Markets at IIR, launched his presentation by laying out some global statistics.

• Total active data center projects worldwide in the planning or engineering stages: 7,895 at a value of more than $2.7 trillion.
• Total active projects under construction: 3,973 for a value of $1.26 trillion, the bulk of which is in North America.
• The pipeline from large developers: 266 GW with 57 projects of more than 1 GW in the works.
• Amazon Web Services has more than 15 GW of planned new data center capacity.

“We are seeing a huge numbers, with demand coming from AI as well as the internet of things, the cloud, and digitization,” said Mullins. “Renewables will probably meet at least half of overall data center demand, but natural gas and coal also play a significant role.”

Several constraints lie in the path of powering of the AI juggernaut. As well as the talent and workforce shortage, there are serious power and grid limitations, supply chain disruptions, and permitting and regulatory hurdles. One way or another, these challenges will have to be overcome. Mullins notes a consistent month-over-month increase in project announcement numbers and capacities.

“The pace of development is accelerating and is set to continue for the foreseeable future,” he said. “The hottest areas are Texas and Virginia, with places by Georgia, Nevada, Ohio, and Arizona also doing well.”

IIR numbers show that U.S. data center electricity demand is on a path to grow from 20 GW in 2023 to more than 100 GW by 2030. By 2028, they could be consuming 12% of the nation’s electricity.

Natural Gas is Popular

Estimates from the likes of Kinder Morgan and Energy Transfer put the total natural gas demand for the US between 6 and 10 Bcf/day within a couple of years. That’s a lot when you consider that the Energy Information Administration (EIA) cited 88.3 Bcf/d as the average for the entire U.S. in July of 2025. In other words, data centers could soon be consuming more than 10% of the country’s gas.

“A lot of this will be behind the meter power,” said Mullins. “More than 25% of new facilities above 500 MW will have behind the meter power by 2030, up from 1% today.”

Meta’s Hyperion project is using three H-class natural gas turbines as part of its multi-gigawatt AI data center in rural Louisiana. As the parent company of Facebook, Meta’s facility will eventually scale to 5 GW. Two of the turbines will be online by 2028 with the third following in 2029. That will take Hyperion to 2.26 GW. An additional 1.5 GW of solar power is part of the plans.

Similarly, the Oracle/OpenAI Stargate project in Abilene Texas will be powered by a combination of natural gas and fuel cells in what is destined to become a $500 billion AI factory. It will occupy 1,400 acres and up eight buildings. Two of the buildings went live in October of 2025, each taking up 980,000 square feet and providing more than 200 MW of capacity. Within a year or so, it will be providing more than 1 GW of energy. Gas turbines from both GE Vernova and Solar Turbines are being deployed for onsite generation.

Elon Musk’s xAI is ordering up to 60 gas turbines for its supercomputer facility in Memphis, Tennessee. The AI data center has been relying on up to 35 temporary turbines from Solaris Energy Infrastructure that generate up to 422 MW of power. These machines are either being transitioned out of facility or shifted to backup. A second xAI data center could draw up to 1.1 GW and could eventually cover a million square feet.

Mullins was followed by Britt Burt, Senior Vice President of Power Industry Research at IIR, who laid out the realities of some projects. While around 50% of announced renewable projects never see the light of day, most of the announced natural gas projects have a medium-to-high probability of completion.

Coal, Burt said, would not be going away quite as fast as expected. He said there are already announcements about planned closures being delayed and he expects this trend to continue. This ultimately means more investment in aging coal plants to increase efficiency and reduce emissions.

He predicted that solar investment would continue to lead in North America as it has done since 2020. Battery storage investment, too, will be strong. Wind investment, on the other hand, peaked in 2019 and investment in offshore wind is drying up. Natural gas investment has been flat for a decade and has been surpassed by wind or solar (or both) each year since 2015. That just changed with a surge in 2025. IIR expects natural gas power plant investment to top $35 billion by next year and stay there for several years.

“Natural gas is being built out to levels we haven’t seen in many years and that will continue for years to come,” said Burt. “In the early 2000s, everyone was building natural gas and it is like that again or perhaps even stronger.”

Most of that investment is in brand new facilities. But there is plenty of money being sunk into expansion of existing facilities, upgrades and maintenance. Texas again leads with 51 active projects of $31 billion, followed by Alberta, Canada with 19 projects of almost $10 billion then North Dakota with 3 projects of almost $8 billion.

Despite an apparent slowdown, Burt says renewables (especially solar) are going to continue to expand. Some timelines might be adjusted but the overall trend toward solar adoption will continue

“More solar farms and battery plants will be built with or without the tax credits,” said Burt. “Land-based wind is also moving forward and repowering of old wind farms is growing in investment.”

Nuclear energy is another beneficiary of the investment boom. The money is being spent on small modular reactor (SMR) development, improvements to existing plants, bringing decommissioned plants back online, and even on plants that were stopped mid-construction almost a decade ago.

“There is a major wave of nuclear capacity on the long-term horizon and a lot of it will be used for data centers,” said Burt.