AI Boom Drives New Demand for Gas Power in California

A surge in artificial intelligence and data center development is straining California’s power grid and may extend the life of natural gas power across the state.

California, home to nearly 300 data centers, is seeing electricity demand spike, especially from facilities running AI inference models 24/7. PG&E reports a doubling in applications for large-scale power users, mainly from the Bay Area, and warns that meeting this demand with renewables alone isn’t realistic in the short term.

By 2030, data center consumption could add the equivalent of another Los Angeles-sized city to the grid.

California’s clean energy goals, including achieving a fully carbon-free grid by 2045, face challenges due to the rapid growth of AI. High costs, limited availability, and lengthy interconnection delays are making it more difficult to deploy wind, solar, and battery storage at the necessary scale.

Despite environmental concerns, utilities and gas companies are lobbying for expanded roles in meeting AI-related load growth. This includes an 'all of the above' approach, such as carbon capture retrofits and battery installations, while keeping fossil fuel capacity online.

With AI and electrification driving up power demand, natural gas could remain a crucial energy source, even in the politically charged California.