Data center demand drives 66% surge in natural gas power plant costs

Tech companies, including Microsoft and Meta, have been falling in love with natural gas lately, rushing to build power plants fed by the fossil fuel to drive their data centers. But their embrace might be a little too tight — the cost to build one of the facilities has spiked 66% in the last two years, according to a new report from BloombergNEF. While natural gas prices remain low in the U.S. despite the ongoing war in Iran, the price to build a new combined cycle gas turbine (CCGT) power plant has risen from less than $1,500 per kilowatt of generating capacity in 2023 to $2,157 last year, the report said. What’s more, it now takes 23% longer to complete a new facility. Data centers are one of the main drivers of a surge in demand for electricity, pushing not just tech companies to invest in natural gas, but utilities as well. Data center operators have been urged by the Trump administration to “bring their own power,” but utilities tend to pass on the cost of new generation to customers. That has led to a growing backlash to data centers among the general public. While data centers aren’t the only driver of new demand for electricity, they are one of the fastest-growing users. New additions are expected to reach 2.7x current demand , pushing it up from 40 gigawatts today to 106 gigawatts by 2035. Part of the driver is the sheer scale of new data centers. Today, only 10% of facilities are 50 megawatts or larger. …