With the acceleration of AI data centre construction, large United States technology companies are shifting more electricity demand to natural gas. However, according to the research institute, Noreva, this option may entail higher costs in the coming years, especially in the context of a slowdown in the supply of natural gas from the United States and an increase in exports of liquefied natural gas.
TechCrunch cites Norva ' s predictions that the price of some gas delivery hubs in the United States is likely to rise to over $10 per million units of heat in the future, while the current prices in most regions are about $2 to $4.5 and Henry Hub in Louisiana is under $3.
Technology giants build their own gas power.
In March of this year, Meta indicated that it would build a 7.5 Giwa gas power plant in Louisiana to power its Hyperion data centre. A few days later, Microsoft and Google also indicated, respectively, that the Giwa class gas power plant would be built in Texas. Amazon plans to build a 7.6 Giwa gas power plant in Texas.
For these long-term light-assets models, the expansion of the data centre has pushed capital expenditures towards physical infrastructure and allowed them deeper access to energy markets.
Price upside risk comes from both supply and demand
Chief Executive Officer Peter Gardett stated that gas prices in the United States had remained stable over the past few years, mainly because demand had been relatively flat, while new supplies continued to compensate for the decline in production of old wells. He expected, however, that new supplies would continue to increase in the future, albeit at a slower pace than in the past, and that the cost of new well development would also rise.
In his view, the real change in market structure was due to two factors: the United States domestic gas market, which was more closely connected to the global market, and the new demand brought about by the AI data centre.
Texas and Louisiana used to attract technology companies, the main reason being that gas is cheap. In West Texas, in particular, many oil wells were accompanied by natural gas that in the past lacked out-of-country pipelines and were often sold by producers at discounts. As new pipelines are established, this component of natural gas is increasingly flowing to export markets.
Electricity prices and operating costs could be under pressure.
It is reported that fuel costs account for about half of the cost of electricity generation in large power plants. If the price of natural gas were doubled or even tripled, the cost of operating the data centre for self-built electricity would increase significantly.
This may lead to two outcomes: first, the cost of AI services being raised; and second, the shift of some technology companies to access the public grid, further pushing up local electricity prices.
Noreva also warned that, even if large technology companies could afford higher gas prices, their gas consumption could widen external opposition to data centres. There are now a large number of consumers who are concerned about the high cost of electricity pushed by data centres, a pressure that may also extend to gas bills in the future.
According to Gardett, if this trend continues, the price of natural gas may even become a variable for discussion at the Technological Corporation's Press conference, suggesting that AI infrastructure expansion is increasingly being affected by energy market volatility.