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Apr 27, 2026
Analyzed by Llama- 4 Scout 17B 16E Instruct

Natural Gas Power Plant Costs Surge 66% as Tech Giants Drive Demand

AI Summary
The cost to build natural gas power plants has surged 66% in two years due to tech companies' demand for electricity to power their data centers. The rising costs and longer construction times may push companies towards renewable energy alternatives.

The Surge in Natural Gas Power Plant Costs

Tech companies, including Microsoft and Meta, have been rapidly building natural gas power plants to drive their data centers, leading to a 66% surge in construction costs over the last two years, according to a report from BloombergNEF. The cost to build a new combined cycle gas turbine (CCGT) power plant has risen from less than $1,500 per kilowatt of generating capacity in 2023 to $2,157 last year.

The Data Behind the Surge

  • The price increase is driven by rising demand for electricity, with data centers expected to increase their demand by 2.7x by 2035, reaching 106 gigawatts from 40 gigawatts today.
  • Data center operators have been urged to 'bring their own power,' but utilities pass on the cost to customers, leading to growing public backlash.

The Impact on the Energy Market

The scramble for natural gas power plants has caused a shortage of gas turbines, with prices expected to be up 195% over 2019 prices by the end of this year. The manufacturing technique for gas turbines doesn't lend itself to quick scaling, leading to waitlists stretching into the early 2030s.

The Shift Towards Renewable Energy

Not all tech companies are committed to natural gas; Google has outlined a new approach relying on renewables paired with long-duration energy storage, including Form Energy's iron-air batteries. As solar panels and batteries have gotten cheaper over time, they offer an alternative to the sky-high costs of natural gas power plants.