Microsoft, Google, and Meta build natural gas plants for AI power

Technology firms are directly securing energy infrastructure to fuel their artificial intelligence operations. On Tuesday, Microsoft announced it is working with Chevron and Engine No. 1 to build a natural gas power plant in West Texas that could grow to produce 5 gigawatts of electricity. This week, Google confirmed it is working with Crusoe to build a 933 MW natural gas power plant in North Texas. Additionally, last week, Meta announced it is adding seven natural gas power plants to its Hyperion data center in Louisiana, bringing the site to 7.46 GW of capacity—an amount equivalent to the power needs of the state of South Dakota. These investments are concentrated in the southern U.S., where the U.S. Geological Survey has estimated natural gas deposits.

This infrastructure expansion is straining supply chains for power generation equipment. According to consultancy Wood Mackenzie, turbine prices are likely to rise 195% by the end of this year relative to 2019 prices. Turbine equipment contributes 20% to 30% of the total cost of a power plant. Due to backlogs, companies will not be able to place new orders for these turbines until 2028, and delivery times are currently taking six years.

To avoid straining public electrical grids, tech companies are increasingly opting for “behind the meter” generation—connecting power plants directly to their data centers to bypass the public grid. However, this strategy does not eliminate resource competition. According to the Energy Information Administration, natural gas generates about 40% of the electricity in the U.S., meaning utility prices remain closely tied to gas markets. While plentiful domestic supplies currently insulate the U.S. from energy market turmoil in the Middle East, production growth in shale gas regions has slowed. If data center demands continue to scale, even behind-the-meter operations could drive up energy costs for other industries and households, particularly during extreme weather events like the 2021 freeze in Texas that disrupted wellhead supplies.

Why it matters

Tech companies are increasingly securing natural gas supplies and building power plants to support the energy-intensive demands of AI data centers, raising concerns about resource competition and grid stability.