Data Center Boom Drives Up Electricity Costs for Consumers

Tech companies are rushing to build their own power sources for new data centers to avoid grid connection delays and political scrutiny.

Nearly three-quarters of planned generation equipment for these facilities is natural gas-fired, totaling 56 GW across the U.S. This boom, however, is straining the power generation supply chain.

Competition for gas turbines is intense, with wait times stretching up to seven years. Manufacturers like GE Vernova and Mitsubishi Power are increasing production, but it may not meet soaring demand.

The increased demand and competition are driving up gas turbine prices, potentially leading to higher costs for utilities and industrial users, which could be passed on to consumers.

To cope with shortages, data centers are exploring alternatives, including deals to reopen nuclear plants, though these are long-term solutions. In the interim, companies are relying on reciprocal engines and diesel generators.

Experts warn these interim solutions, and even standard gas turbines, are not designed for the continuous power needs of data centers. Securing parts and technicians for these facilities over decades also poses significant challenges.