Rapid growth in artificial intelligence (AI) data center power demand is driving a resurgence in fossil fuel investment. In a new insight, Director of Energy and Environmental Policy Shuting Pomerleau and Irene Ko discuss the role of natural gas in the electricity generation.

Key points:

• Recent new investments are highlighted by the 2026 approval of massive natural gas generation projects in Texas and Pennsylvania; these developments pose challenges to carbon-free energy targets as utilities prioritize grid reliability to support 24/7 AI workloads.
• While renewable energy continues to dominate total planned capacity, there has been an increase in natural gas planned capacity from 11.1 percent in 2024 to 18.1 percent in 2026—notably, planned non-renewable additions surged by 71 percent from 2025–2026, while renewable growth flattened to just 2 percent over the same period.
• Despite higher carbon intensity, natural gas maintains a significant competitive edge due to lower grid-connection costs and higher project completion rates; from 2017–2022, natural gas connection costs averaged $24/kilowatt (kW), less than one-tenth the cost of solar ($253/kW) and offshore wind ($335/kW)—as renewable projects face greater geographical and infrastructure hurdles.

Read the analysis.