Market Data 
- Amazon, Meta, and Microsoft need massive amounts of electricity to power their AI data centers.
- In states like Louisiana and Wisconsin, utilities want to serve them with new natural gas plants.
- Natural gas power is the fastest way to get power to data centers, although it has drawbacks.
From the Midwest to the Southeast, electricity demand from Big Tech’s AI data center projects has become so great that in some states, utilities want to build new natural gas-fired power plants to serve them.
Microsoft is building a data center hub outside Milwaukee, where the local grid doesn’t have the capacity to serve it. WEC Energy Group’s We Energies has told state regulators a $2 billion plan for new natural gas generation is “critical” to powering Microsoft’s AI operations while continuing to serve the rest of its customers.
Once construction finishes at Meta’s data center campus in Louisiana, the facility’s capacity will total more than two gigawatts. That amount of electricity is so great that Entergy’s Louisiana subsidiary plans to build new natural gas plants for the first time in 50 years.
Meanwhile, Amazon’s data center plans in Mississippi have spurred Entergy’s subsidiary in the state to start construction of a 754-megawatt natural gas plant, which the company said could power 385,000 homes.
Those three examples are part of a broader push by US power companies to build new natural gas infrastructure in response to surging power demand from AI. The increased reliance on natural gas is at odds with a transition to renewable energy, which scientists say is needed to reduce the emissions fueling the climate crisis.
Utility plans to build new natural gas plants also conflict with the narrative Big Tech companies have touted publicly — that the renewable and low-carbon energy projects they have invested in will ultimately power their data center operations. Many of those projects are smaller in scale and depend on advancing less widely-used technologies, like Meta’s contract with a geothermal energy startup. Others, like Microsoft’s deal to restart the Three Mile Island nuclear reactor and Amazon’s power purchase agreement with the Susquehanna nuclear plant, face steep regulatory hurdles.
“The only concrete plans I’m seeing are natural gas plants,” said Cathy Kunkel, energy consultant at the Institute for Energy Economics and Financial Analysis.
Kunkel’s research found that utilities in four other states — Virginia, Georgia, North Carolina, and South Carolina — plan to build a combined 20 GW of new natural gas generation by 2040, primarily due to data center demand.
The current pace of data center development could lead utilities to build more new infrastructure than their Big Tech customers ultimately need, Kunkel said. Investor-owned utilities like Entergy and WEC Energy Group are already incentivized to build because state regulations allow them to profit from billing new infrastructure investments plus interest to their customers. Kunkel said she is concerned that some utilities could be overstating demand from their data center customers to recoup profits down the line — leaving their entire customer base on the hook, regardless of whether the data centers need all the power they say they will.
In 2024, requests from natural gas plants to connect to the grid more than doubled from the year before, according to data from BTU Analytics, a market research firm.
The turn to natural gas reflects the current reality data centers face — they want more power than the electric grid can provide, and they want it ASAP.
“There’s a big time scale mismatch between the rates at which data center folks want to develop and the rates at which the electric power grid can develop,” said Philip Krein, research professor of electrical and computer engineering at the University of Illinois.
Krein said solar and wind power are actually the fastest sources of new power generation to build, although they aren’t the best match for data centers, which need access to a consistent stream of 24/7 power.
“Natural gas is relatively the quickest way to get substantial expansion of grid capacity so a data center can get up and running fast,” he said.
Utilities say that building new gas-fired plants is the most cost-efficient way to maintain grid reliability for all customers as the rapid stream of AI data centers comes online. Still, Krein said, building new natural gas infrastructure for data centers could have environmental and financial implications for everyone.
“Everybody wants to move really fast, and they’re not willing to wait,” he said. “I hope they don’t get ahead of themselves.”
Here are three of the biggest data center sites where utilities plan to build natural gas plants to power them.
Microsoft in Wisconsin
Microsoft has committed to spending $3.3 billion on an AI data center hub at the former Foxconn development site in Wisconsin’s Racine County. The company has also purchased land in nearby Kenosha, signaling further investment in the area.
Microsoft has not publicly disclosed the amount of electricity its Wisconsin data centers will need. Early estimates, now likely outdated, were between 1 and 1.1 GW, Scotiabank analyst Andrew Weisel wrote in an October research note. In its February investor presentation, We Energies owner WEC Energy Group said it faces nearly 2 GW of demand driven by economic development in its service territory.
To meet that demand, We Energies, the local utility serving Microsoft, is seeking approval from Wisconsin’s Public Service Commission to spend roughly $2 billion on natural gas infrastructure, including a new plant with more than 1 GW of capacity.
A spokesman for We Energies said the company’s proposed natural gas generating facilities in the area comply with the grid operator’s rules. The company also plans to bring 4.3 GW of renewable energy online by 2029, the spokesman said.
“Our customers count on us to deliver reliable energy — it’s our job to provide it safely 24 hours a day, 365 days a year,” the We Energies spokesman said in a statement. “In the coming years, we’ll continue to transform our power generation fleet to support reliability and economic growth — by investing in a balanced mix of wind, solar, energy storage, and natural gas.”
“The bulk power system needs sufficient generation and transmission to stay reliable and support broad economic growth,” a spokesperson for Microsoft said in an email statement. “We are working with utility companies, grid operators, and regulators to achieve our ambitious carbon-free energy goals to bring more energy online and are committed to paying our share as we do so.”
The company’s strategy, the spokesperson said, “involves substantial investments in renewable energy projects, partnering with utilities on new tariffs for clean energy, power purchase agreements (PPAs), and innovative technologies to enhance energy efficiency and reduce carbon emissions.”
In Wisconsin, Microsoft has also signed an agreement to purchase the energy produced by a 250-MW solar farm under development in Portage County.
Meta in Louisiana
In December, Meta announced a $10 billion data center investment in Louisiana. Once complete, the facility is expected to be the company’s largest to date.
As part of the deal that brought Meta to the state, Entergy’s Louisiana subsidiary promised to deliver the power its data center operations require.
To do that, Entergy asked state regulators to approve a $3.2 billion plan to build new infrastructure, including 2 GW of natural gas generation. In its petition, Entergy said that approval to build the gas plants would be key in sealing Meta’s decision to build data centers in Louisiana.
A spokesperson for Meta said the company is committed to matching its non-renewable energy use with “100% clean and renewable energy” through power purchase agreements and renewable energy credits. Meta is also working with Entergy to bring 1.5 GW of renewable energy to Louisiana and is exploring nuclear power, the spokesperson said.
Amazon in Mississippi
In November, Entergy’s Mississippi subsidiary broke ground on a $1.2 billion, 754-MW natural gas plant. The plant will support adding Amazon’s data centers to Entergy’s service territory in Mississippi and will ultimately be paid for by Entergy’s entire customer base.
As part of Amazon’s incentive package passed by the Mississippi state legislature, state regulators waived the approval process for any new power infrastructure connected with the project.
“It is really concerning for the ratepayers of Mississippi, especially residential ratepayers, that a utility has effectively carte blanche to build whatever they see fit,” said Logan Burke, director of the Alliance for Affordable Energy.
Amazon has said it plans to match the non-renewable energy used by its Mississippi data centers with power purchase agreements for energy generated from wind and solar farms in the state. A spokesperson for Amazon said one wind farm and four solar farms are already operational.
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