March 5, 2025
As data centers continue to proliferate and their energy consumption escalates, innovative solutions like on-site natural gas power generation offer a viable path to meet these demands.
In 2025, the rapid expansion of data centers, driven by advancements in artificial intelligence (AI) and cloud computing, has led to a significant increase in energy consumption. This surge has strained existing power grids, prompting innovative approaches to ensure reliable energy supply.
Data centers have become integral to modern infrastructure, supporting everything from streaming services to financial transactions. However, their operation is energy-intensive. In 2023, data centers consumed approximately 4.4% of the total U.S. electricity, and projections indicate this could rise to between 6.7% and 12% by 2028. This upward trend is largely attributed to the computational requirements of AI applications and the increasing reliance on digital services.
The burgeoning energy needs of data centers have placed unprecedented pressure on power grids. In regions like Texas, this has led to legislative debates over infrastructure investments to prevent outages similar to the 2021 blackouts. The Electric Reliability Council of Texas (ERCOT) has raised concerns that electricity demand could potentially double due to proposed projects, many of which are data centers.
To address these challenges, some companies are adopting a straightforward yet effective strategy: utilizing natural gas directly at data center sites. This approach involves constructing natural gas-fired power plants adjacent to or within data centers, thereby reducing reliance on external power grids and enhancing energy reliability.
Case Study: CloudBurst Data Centers in Texas
CloudBurst Data Centers, a Denver-based startup, exemplifies this innovative approach. The company plans to build a data center in Hays County, Texas, powered directly by natural gas sourced from Energy Transfer’s Oasis Pipeline. This on-site power generation is expected to provide a stable and efficient energy supply, minimizing potential disruptions associated with grid dependencies.
Case Study: Powerconnex in Ohio
Similarly, in New Albany, Ohio, Powerconnex has proposed a 120 MW natural gas plant to serve as the primary electricity source for a new data center on the same site. By integrating power generation within the data center infrastructure, this model aims to meet the high energy demands of modern data processing facilities effectively.
• Reliability: On-site natural gas plants provide a consistent power supply, crucial for data centers that require uninterrupted operation.
• Grid Stability: By generating power independently, these data centers alleviate stress on local power grids, contributing to overall grid stability.
• Scalability: This model allows data centers to scale their operations without being constrained by external power availability.
As data centers continue to proliferate and their energy consumption escalates, innovative solutions like on-site natural gas power generation offer a viable path to meet these demands. By adopting such approaches, data centers can ensure operational reliability while mitigating the impact on broader power infrastructures, thereby supporting the digital economy’s sustainable growth.
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At Fieldvest, we connect accredited investors with vetted, high-return energy projects that not only support critical infrastructure like data centers but also offer significant tax benefits. With direct investments in U.S. natural gas and energy production, investors can leverage depletion allowances, intangible drilling cost deductions, and long-term cash flow opportunities. If you’re looking for a strategic way to reduce taxes while investing in essential energy assets, Fieldvest makes it simple. Let’s talk.