The Rise of Gas Turbines: A New Energy Paradigm for AI Power
The oil and gas industry is keenly interested in providing electrical power that can be generated by gas turbines. Several factors contribute to this interest, including the predicted peak oil production around 2030, the growth of natural gas, and the increasing demand for electricity to support AI technology. However, there are also challenges, such as the uncertainty surrounding long-term investments in liquefied natural gas (LNG) and the rising costs of solar/storage batteries. According to the International Energy Agency (IEA), the global rate of electricity consumption growth accelerated in 2024, with a record increase of 1,080 TWh (TerraWatt hours). This growth is largely attributed to factors such as record global heat and cooling, rising industrial consumption, electrification of transportation, and growth of data centers and artificial intelligence (AI).
- The IEA report highlights the massive increase in electricity demand, equivalent to bringing online 135 new nuclear reactors in 2024.
- This sudden growth of electrical power has significant implications for new investments in natural gas, solar, and batteries, as well as geothermal and nuclear technologies.
As the global energy landscape continues to evolve, the U.S. electricity consumption is also on the rise.
The U.S. Electricity Consumption
A report by S&P Global projects that the U.S. will require 1,000 GW of extra power by 2040, with 940 GW coming from renewable sources and 80 GW from gas-fired power plants. This translates to 81.9 bcfd (billion cubic feet per day) of gas wells, which is a significant increase from the current U.S. natural gas production of ~100 bcfd.
| Year | Renewable Power | Gas-Fired Power | Total Power |
| 2040 | 940 GW | 80 GW | 1,020 GW |
The increasing demand for electricity in the U.S. is driven by the growing need for power to support AI data centers. Big data tech firms Microsoft, Google, Meta, and Amazon are initially favored carbon-free sources of electricity, but the new AI power requirements are immense, and they are now embracing fossil natural gas.
“Adding above 900 GW to the supply mix through 2040, renewables and batteries are by far the main source of supply … on a nameplate basis given their availability, low-cost, preference from consumers, and policy support.”
While the gas side of the equation has serious headwinds, such as the backlog of gas turbines, some companies are proactive. Engine No. 1, a famous company known for its successful clash with ExxonMobil, has booked gas turbines from GE Vernova, a manufacturer. This means that other buyers will have to wait until 2028.
| Company | Gas Turbine Backlog (2025) |
| GE Vernova | $73 billion |
Furthermore, big-Gas companies are moving in. Diamondback Energy wants to develop a gas-fired power plant in the Permian basin, Chevron has partnered with Engine No. 1 and GE Vernova to leverage their gas turbines, and ExxonMobil is also involved, but has not revealed their nascent projects. NRG Energy, a developer of gas-fired power plants, has acquired six power plants last month. Despite these efforts, the cost advantage lies with solar and battery storage, as they are cheaper and faster to install than gas turbines. Battery storage prices have come down significantly since 2023, and this trend is expected to continue. With this, the cost advantage lies with solar and batteries—and it’s also cleaner energy than fossil gas plants, as desired by the big digital companies.
| Year | Solar Capacity | Battery Capacity |
| 2024 | 220 GW | 29 GW |
| 2025 | 250 GW | 44 GW |
In the U.S., renewables (excluding nuclear) accounted for about 90% of new installed capacity in 2024. The market has spoken about accessible power for AI data centers. Renewables plus battery storage (SoWiBess) now make up 30% of U.S. power capacity. The U.S. has only to look down under to Australia, where one state has gone from zero to 75% renewable electricity in 16 years and expects to reach 100% by 2027. Discerning statements have been made by people in the know about electrical power: gas versus renewables. Brian Faist of Avangrid notes that solar power is just the fastest, while Jason Grumet, CEO of American Clean Power Association emphasizes that the energy moving forward in the country is clean power. “The energy that is moving forward in this country right now is clean power.” Big data tech firms are embracing this trend and investing in clean energy sources. The future of AI and the energy industry is looking bright, with solar and battery storage set to play a major role in meeting the growing demand for electricity.
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