Data Centers Will Drive Demand for Natural Gas, TC Energy Says

(Bloomberg) -- The growth of power-hungry data centers will send demand soaring for natural gas as more of the fuel is used to generate electricity, according to TC Energy Corporation, the largest operator of natural gas pipelines in North America. 

Gas demand for electricity to run data centers will increase by as much as 8 billion cubic feet a day by 2030, Stanley Chapman, TC Energy’s executive vice president and chief operating officer of natural gas pipelines, said in an earnings call. That’s equal to 21% of current US demand for the fuel in electric generation.

Data centers, which power artificial-intelligence technology, are set to give electric utilities the biggest demand jump in a generation. Along with data centers to run AI computing, America’s grid is being tested by new factories and the electrification of everything from vehicles to heat pumps. All of that is poised to keep demand robust for natural gas and other fossil fuels used in power generation. 

The demand growth is prompting TC Energy to reinforce gas-pipeline networks running through states including Virginia and Wisconsin and to increase connections to local distribution companies in those markets. 

“We do see a meaningful load-in growth opportunity and increased demand in coming years due to data centers,” Chapman said.

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Installed data center electricity capacity will grow by about 14 gigawatts from 2023 to 2030, equal to about 2 billion cubic feet a day of incremental natural gas demand if fully served by gas-fired power plants, Carson Kearl, who authored an Enverus Intelligence Research report on the subject, said in a May 1 statement. 

“Data center capacity growth will not translate one-to-one into net new load growth,” he said. “Operators will be on the hunt for cheap interties from current industrial consumers.”