Utilities Plan 500 New Gas Plants to Power Data Center Boom
Washington, Friday, 6 February 2026.
Utilities plan nearly 500 new gas plants to fuel the AI boom, risking further cost spikes as electricity prices already rise at double the rate of inflation.
Analyzing the Cost of Capacity
On February 5, 2026, the Sierra Club released a comprehensive tracker revealing that United States utility companies are moving forward with plans to construct nearly 500 new gas-fired power plants [1][2]. This infrastructure strategy represents a projected increase in gas power plant capacity of nearly 50 percent nationwide [1][2]. This aggressive buildout arrives at a precarious economic moment for consumers; over the past year, electricity prices in the U.S. have increased at double the rate of inflation [1][2]. The data suggests a widening divergence between utility capital expenditures and the financial realities facing American households, raising concerns that ratepayers will bear the burden of these expensive long-term assets.
The AI and Data Center Catalyst
The primary engine driving this resurgence in fossil fuel investment is the exponential energy demand from data centers and artificial intelligence infrastructure. The states with the highest concentration of planned gas capacity—Texas, Georgia, Indiana, Virginia, Missouri, and Arizona—are simultaneously the locations with significant proposals for new data center facilities [2]. While utilities argue gas is necessary for baseload reliability, performance data from February 2, 2026, indicates that renewable energy sources outperformed gas plants during recent extreme weather conditions [1][2]. Despite this, gas remains the dominant fuel source for the sector’s expansion.
Federal Policy and Renewable Headwinds
While the gas sector expands, competing renewable energy projects are encountering significant regulatory friction. As of early February 2026, federal agencies under the Trump administration are delaying approvals for renewable energy projects on both federal and private property [8]. Specifically, more than 60 large-scale wind and solar farms on federal lands are currently being stymied, alongside hundreds of projects on private land [8]. These administrative delays have immediate market impacts; for instance, the Jackalope Wind project, which aimed to generate clean electricity by 2027, is now effectively dead following stalled environmental reviews [8].
Local Economic Risks and Grid Strain
The economic disparity between the costs of grid expansion and the local benefits provided by data centers is drawing scrutiny from state legislators. On February 4, 2026, Michigan lawmakers heard testimony warning that large-scale data centers could drive up utility costs while offering minimal employment returns; once operational, these facilities typically employ fewer than 50 people, a stark contrast to other large industrial developments [5]. Furthermore, the heavy power load required by these centers threatens to delay the retirement of older coal and gas plants, potentially undermining state-level climate goals and energy waste reduction laws [5].