The data center industry is growing rapidly and creating significant upside for natural gas consumption. East Daley Analytics’ base case projects up to 6 Bcf/d of additional gas demand by 2030 to make electricity for data centers, accounting for 290 projects totaling ~81 GW of new power capacity.
We track data center projects in the new Data Center Demand Monitor, pictured in the image. In our base case, EDA forecasts 4.2-6.1 Bcf/d of new gas demand. This range is based on existing projects, and the swift pace of new announcements suggests that actual demand could surpass our outlook. An increase of just 15 projects, each averaging 280 MW, would raise our gas demand projections by 5%.
Furthermore, the sector is trending toward onsite gas-fired generation. Data centers are favoring behind-the-grid solutions, often using single-cycle ‘peakers’ with heat rates of 10–11 MMBtu/MWh, compared to the 6.8 MMBtu/MWh heat rate assumed for combined-cycle plants. This shift could lead to a 5% increase in our gas demand estimates for every 10% load moved to less efficient onsite generation.
Natural gas also maintains a cost advantage over renewable energy sources. According to a 2022 study by the Energy Information Administration (EIA), the capacity-weighted average construction cost for natural gas-fired generation was ~$820,000 per MW, while solar and wind projects cost $1.6MM and $1.45MM per MW. Despite advancements in renewables, natural gas remains the most affordable and reliable option for meeting the baseload demands of data centers.
If natural gas captures a larger share of the power load than our current assumption of 40%, demand could increase significantly. For instance, if 50% of new data center power demand is met by natural gas, it would add 1.13 Bcf/d to our projections.
Users can test these sensitivities in the Data Center Demand Monitor. This tool gives a bottoms-up approach to quantifying gas demand for data centers. We track and map nearly 300 projects by county across the US to visualize where new demand could materialize.
The Data Center Demand Monitor is available as part of the Macro Supply & Demand package. Reach out to East Daley to learn more. – Zach Krause.
Data Center Demand Monitor - Available Now!
Introducing Data Center Demand Monitor by East Daley Analytics. This is your go-to source for tracking data center projects and demand. We monitor and visualize nearly 300 US data center projects. Use Data Center Demand Monitor to forecast demand, identify pipeline corridors and track data center projects. — Request your demo now of the Data Center Demand Monitor!
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