Observed Signal · Apr 27, 2026 · Research Report · Source: techcrunch · Impact: 3/5 · Sentiment: Negative
Data center demand fuels 66% rise in gas plant costs
Tech companies' growing appetite for electricity to power large data centers has coincided with a sharp rise in the cost and lead time to build natural gas power plants. A BloombergNEF report cited by TechCrunch finds the price to build a combined-cycle gas turbine (CCGT) plant rose about 66% over two years — from under $1,500/kW in 2023 to $2,157/kW — and project completion now takes ~23% longer. Data-center electricity demand is projected to grow from about 40 GW today to 106 GW by 2035. Shortages and steep price increases for gas-turbine equipment (expected +195% vs. 2019) are extending waitlists into the early 2030s. Some companies, notably Google, are exploring renewables paired with long-duration storage (iron‑air batteries) as alternatives to new gas generation.
Rising capital costs, longer build times and equipment shortages for gas-fired generation materially affect data-center expansion and electricity supply for cloud and compute infrastructure — implications for cloud costs, capacity planning, and timelines relevant to technology companies and industries that depend on large-scale compute.
Track Google Signals & Market Shifts in Real-Time
Polaris7 autonomous intelligence agents track regulatory filings, primary sources, executive changes, and deal flow 24/7. Create your free Explorer workspace to monitor these entities.
Key Takeaways & Evidence Grounding
- BloombergNEF reports the cost to build a combined-cycle gas turbine (CCGT) power plant rose ~66% over two years, from under $1,500 per kilowatt in 2023 to $2,157 per kilowatt.
- New natural gas power plants now take about 23% longer to complete than two years ago.
- Planned data-center electricity demand is expected to rise from ~40 gigawatts today to 106 gigawatts by 2035 (about 2.7x current demand).
- Gas-turbine equipment prices are expected to be up about 195% versus 2019 prices, creating equipment shortages and multi-year waitlists into the early 2030s.
- Google is pursuing renewables paired with long-duration energy storage (including Form Energy’s iron‑air batteries) as an alternative to natural gas generation.
Connected Companies & Entities
3 Entities mappedOntology Mapping & Concepts
Related Market Signals & Shifts
Recent verified developments and strategic activity across this market segment.
US data centers to consume more natural gas than Germany and Japan combined
A new report from BloombergNEF projects that by 2035, U.S. data centers will consume about 18 billion cubic feet of natural gas per day, nearly double the previous forecast and more than Germany and Japan combined. This demand is driven by both onsite power plants and grid-connected data centers, with the latter expected to add 15 billion cubic feet per day by 2035. The surge could raise natural gas prices and increase greenhouse gas emissions by 1 million metric tons daily. Tech giants like Meta, Microsoft, Google, and Amazon are building natural gas plants to bypass the grid, contributing to the demand. Analysts at Noreva warn that reliance on stable gas prices may be misguided, potentially impacting utility ratepayers.
Big Tech Builds Natural-Gas Plants for AI
Major technology companies are investing in on-site natural gas power plants to secure large volumes of electricity for growing AI compute demand. Microsoft is partnering with Chevron and Engine No. 1 on a West Texas plant that could scale to 5 GW; Google is working with Crusoe on a 933 MW plant in North Texas; Meta added seven natural-gas plants at its Hyperion site in Louisiana, bringing that campus to 7.46 GW. Analysts warn of a turbine shortage and steep equipment-price inflation — Wood Mackenzie projects turbine prices could rise ~195% versus 2019 and notes multi-year delivery lead times with new orders constrained until 2028 and ~6-year delivery windows — creating supply-chain risks. Because natural gas fuels about 40% of U.S. electricity (EIA), these behind-the-meter builds could affect regional gas markets, electricity prices, other gas-dependent industries, and resilience during weather-driven supply shocks.
Hyperscalers' Natural Gas Bets Could Backfire
A Noreva research forecast warns that rising demand from hyperscalers building gigawatt-scale natural gas plants to power AI data centers could push U.S. natural gas prices far higher — in some regions above $10/MMBtu — as domestic supply growth slows and exports rise. The report and Noreva CEO Peter Gardett say hyperscalers (Amazon, Google, Meta, Microsoft) may be exposed to significant fuel-price risk after recent moves to build or contract large gas-fired generation. Higher gas prices would raise data-center power costs, could increase end-user electricity bills, and may alter hyperscalers’ operating choices (e.g., connecting to the grid). The article cites announced projects (Meta, Microsoft, Google, Amazon) and frames the forecast as a potential business and reputational risk for cloud/AI infrastructure providers.
Track Real-Time Market Signals & Shifts
Set up custom watchlists to receive automated, evidence-grounded executive digests whenever material signals or shifts occur across your tracked landscape.