Technology companies worried about sourcing enough electricity to drive the power-hungry data centres processing artificial intelligence (AI) are becoming more open to using gas-fired generation to supplement renewable energy in the future.
Microsoft is the latest major player to suggest natural gas could play an increased role in the energy mix for its facilities, if it is combined with carbon capture and storage (CCS) to prevent excess greenhouse gas emissions. Bobby Hollis, Microsoft’s Vice President for Energy, talking to CNBC in mid-March , said “that absolutely would not be off the table”, so long as the project was commercially viable and cost competitive.
The largest US tech companies have sought to stress their green credentials by drawing up plans in recent years to source much of their electricity supply from renewable sources, such as solar and wind energy, either from the grid or their own on-site developments. Microsoft has acquired a renewable energy of more 30 gigawatts globally to date.
But the tech firms are concerned that expansion of renewables generation alone may not be able to keep up with demand driven by fast-expanding data centre capacity needed to process AI. Goldman Sachs recently forecast that global power demand from data centres would increase 50% by 2027 from 2023 levels and by up to 165% by 2030.
Meanwhile, producers, led by ExxonMobil and Chevron, are seeking to secure future markets for their gas by developing projects to supply data centres using natural gas, with scope for carbon capture to be added.
Chevron said earlier in 2025 it was planning to build off-grid behind-the-meter gas-fired power plants located near data centres in partnership with GE Vernova and Engine No. 1 , which could be operational by 2027. The company said these projects would be designed to allow integration of lower carbon intensity solutions, such as CCS and renewables.
Whether gas-fired power will still be a commercial proposition when the cost of adding CCS to prevent harmful atmospheric emissions is included remains to be seen. CCS technology remains both costly and unproven at scale, despite years of development.
However, backing for the hydrocarbons industry from the administration of US President Donald Trump has encouraged companies to seek new long-term markets for their gas.
Renewables’ key role
Now, there is talk of renewables being a “bridging” energy source, while new gas-fired and nuclear power stations are developed. That makes an interesting contrast with the line taken by gas producers in the 2010s, that natural gas would acts as a transition feedstock while renewable energy infrastructure was being put in place.
John Ketchum, CEO of major US utility firm NextEra Energy, said at the CERA Week energy conference in Houston in March that all types of power generation would be needed meet fast-rising demand from customers such as data centres. But he said lead times for building gas-fired and nuclear power were such that new capacity was unlikely to come onstream until the early to mid-2030s, so renewable energy – which he noted also cost less – would need to bridge the gap.
Another problem for energy planners is accurately forecasting the pace at which demand for new generating capacity is set to rise, as that depends to an extent on whether breakthroughs can be made in reducing the amount of energy consumed by AI processing or whether existing grid supply can be used more effectively. One possible way to do that was outlined recently by researchers at Duke University.
Microsoft’s Hollis stressed that, while more gas-fired capacity may be needed to power the AI revolution, there was still room to ramp up renewables first. He told Reuters in another interview that gas power should only be added when necessary. “Before we ever get to that place, let’s make sure that we’ve added the renewables,” he said.
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