Commodities
AI Boom to Drive US Natural Gas Demand Higher Through 2030, RBC Says
Natural gas is set to play a defining role in powering the rapid expansion of artificial intelligence-driven data centers in the US, as developers prioritize cost, reliability, and speed to market over longer-term decarbonization goals, RBC Capital Markets strategists said on Monday.RBC analysts said gas demand tied to data center growth could reach about 6.1 billion cubic feet per day by 2030, an inflection point the bank previously expected to occur later in the following decade.The upward revision reflects both the scale and geographic concentration of projects in regions with abundant gas supply and existing infrastructure. "Energy intensity, project location, and the need for reliable baseload power are driving a more gas-heavy outlook through 2030," RBC analysts said.RBC said the surge underscores how energy considerations are reshaping the AI buildout, with hyperscale operators increasingly clustering projects in "gassier" grids such as Texas and Virginia.Together, the two states account for about 40% of operating, planned, and under-construction capacity, while Georgia, Ohio, Illinois, Arizona, Louisiana, and Pennsylvania are gaining traction due to favorable regulation and proximity to fuel sources.The bank projected that data center power demand could reach 580 terawatt-hours by 2030 in a bullish scenario, with longer-term consumption approaching 900 TWh by 2035 as gains in chip efficiency are outpaced by the energy intensity of AI workloads.However, to meet the demand, developers are adopting a two-pronged approach to power procurement, expanding grid-connected generation while simultaneously building on-site capacity.On the grid side, RBC said front-of-the-meter gas capacity has surged, with about 64 gigawatts of projects now queued for interconnection by 2030, more than double the level planned at the start of 2025.The average plant size has also grown, reflecting the scale required to support large AI campuses. Simultaneously, hyperscalers are accelerating behind-the-meter strategies, announcing over 100 GW of on-site gas-fired generation to bypass congested interconnection queues and secure reliable, always-on power.RBC analysts said the model is gaining momentum as developers seek to avoid delays and shield customers from rising electricity costs. It also aligns with industry pledges to invest in dedicated infrastructure rather than relying solely on public grids."Natural gas has emerged as the backbone fuel for both approaches in the near term," the analysts said, citing its availability, relatively low cost, and insulation from geopolitical volatility compared with global energy markets.Meanwhile, the US Department of Energy forecasts that 36.6 GW of data center capacity is currently under construction, with an additional 201.5 GW in planning. Though some projects may not materialize, the pipeline highlights the scale of developer interest and the growing strain on regional power systems.Texas is at the forefront of the expansion, with interconnection requests from data centers alone reaching 356 GW in the ERCOT market. The expansion is prompting regulators to overhaul approval processes, which could improve transparency but also slow project timelines.Louisiana is emerging as a new hotspot after introducing expedited permitting rules for power generation, while Pennsylvania is attracting investment due to its proximity to fiber networks and the Appalachian gas basin. Developers are also pairing data centers with dedicated gas plants to ease pressure on local grids.