Natural gas is regaining prominence as the U.S. power sector is “entering a critical growth phase” as it prepares to meet the increasing demands from data centers. (Source: Shutterstock)
The U.S. power sector is “entering a critical growth phase” as it prepares to meet the increasing demands from data centers, propelling natural gas back to prominence as it harnesses the fossil fuel as a needed power source, Rystad Energy said.
The research and analysis firm said U.S. power consumption will exceed 4,200 terawatt-hours (TWh) for the first time in 2025, up 2% from 2024, and just the beginning of even more growth. Data centers, which accounted for 22 gigawatts (GW) of capacity at the end of 2023, will add 60 GW to that total by 2035 based on announced projects. Their power use may reach 450 TWh, up from 130 TWh in 2023.
To help meet that demand, utility companies are planning 17.5 GW of new capacity in the coming years—the highest level since 2017. The report noted that utilities will also have to improve their aging transmission infrastructure.
Rystad said Virginia and Texas are attracting significant investment from data center developers. It cited Virginia’s advanced infrastructure and tax incentives and Texas’ favorable grid policies and abundant solar and wind.
The added demand is likely to increase the cost of power for consumers as utilities pass on higher transmission and distribution costs. Rystad said residential electricity prices averaged $165 per MWh last year, up 25% from 2020.
Recommended Reading
Manchin: ‘We Cannot Get Back Into Another War’
2025-06-19 - Former U.S. Senator Joe Manchin told oil and gas producers the U.S. already has two wars “we never paid for” at the IPAA’s annual meeting. The denuclearization of Iran should be left up to Israel, he said.
Nuclear Stocks Surge After Trump Signs Orders to Boost Industry
2025-05-23 - Shares of nuclear power companies surged after U.S. President Donald Trump signed executive orders seeking to cut down on industry regulations and fast-track new licenses for reactors and power plants.
EU Countries Seek to Keep Russian Gas Exit Plans Secret, Document Shows
2025-07-10 - EU governments are planning to keep secret how they plan to phase out using Russian oil and gas by the end of 2027.
Escalating Hormuz Tensions Drive Up Middle East War Risk Insurance Costs, Sources Say
2025-06-23 - A threatened closure of the Strait of Hormuz, a major trade waterway for oil tankers in the Persian Gulf region, has skyrocketed oil forecasts up to $100/bbl.
If US Cancels, US Pays: Interior’s Burgum Calls for Sovereign Risk Insurance
2025-04-27 - With a sovereign risk insurance in place, a president cancelling a permit “would have to say ‘We're canceling this thing by fiat, but you get your money back that you've invested,” Interior Secretary Doug Burgum told energy industry members in Oklahoma City.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.