Data centers consume vast amounts of electricity to power servers and run websites, apps and generative AI. The United States hosts more data centers than any other country, and the extra demand is straining transmission grids and pushing up power prices. Struggling grid operators are turning to polluting fossil fuels to meet spikes in demand, and in some cases delaying retirements of coal and gas plants or keeping older plants online.
PJM Interconnection, the grid operator serving 13 eastern states including Virginia — a major data center hub — postponed or canceled the planned closure of about 60% of fossil-fuel plants last year, Reuters reported. Eleven of the plants slated for closure were “peakers” — units that run only during demand surges. “It is clear today, nationally, that electricity demand is outstripping supply — the market reflects this, and generators are responding,” PJM spokesman Jeff Shields said. “We need every single megawatt of energy we can get right now.”
Some utilities have shifted investment plans toward fossil fuels or nuclear to ensure reliability while data center demand grows. Dominion Energy in Virginia, which once pledged 100% renewables by 2045, plans significant gas and nuclear investment through 2039. NV Energy in Nevada warned data centers could make it miss the state’s 50% renewables-by-2030 target. NextEra Energy said it no longer saw “a realistic path to achieving actual zero-carbon emissions by 2045.”
Why gas dominates
Analysts say the unique and often unpredictable electricity needs of data centers make natural gas attractive. Dave Jones, chief analyst at Ember, notes that AI data centers today can use as much electricity as 100,000 households, while the largest facilities under construction may need 20 times that. Rapid technological change complicates long-term planning, and many companies view on-site gas generation or grid-delivered gas as the quickest, cheapest, easiest option.
The International Energy Agency (IEA) reports that in the US natural gas supplies more than 40% of data centers’ electricity, while coal provides about 15%. Globally, the IEA projects that natural gas and coal will supply over 40% of the additional electricity needed by data centers through at least 2030, making upcoming data center builds a near-term growth driver for fossil-fuel generation. Lower US natural gas prices — at an 18-month low at the time of reporting — further favor gas-fired power.
Policy and market headwinds for renewables
The low price of gas, together with tariffs on imported solar panels and other clean-energy equipment, has slowed renewable expansion for data centers in the US. Jones also points to weakened climate policy under the Trump administration and a reduced appetite for climate commitments among some companies. Federal energy officials have emphasized coal and nuclear as part of strategies to secure enough power for data center and AI growth. “Climate change, like every other issue, is a trade-off,” Energy Secretary Chris Wright said at a 2025 briefing, framing energy choices as part of broader industrial and geopolitical objectives.
Where renewables fit
Clean-energy advocates argue a trade-off is unnecessary. Upgrades to transmission lines, expanded storage like batteries, and better planning could supply the flexible power data centers need without increased air pollution. Renewables already supply electricity for roughly a quarter of the more than 4,200 US data centers, concentrated in sunny southern and southwestern states. The IEA also expects that renewables and natural gas together will account for over 65% of electricity for data centers by 2030, and notes that in parts of Asia renewables are keeping pace with rising demand even as coal remains part of the mix.
Geopolitical or commodity-driven spikes in fossil-fuel prices can accelerate clean-energy deployment. Jones says the energy shock linked to the US-Israeli war in Iran could prompt some Asian countries building data center capacity to favor renewables and nuclear over oil and gas.
Community pushback and policy action
Local opposition to data centers is growing as residents worry about higher electricity bills, environmental impacts and strain on infrastructure. A Quinnipiac University poll found 65% of Americans opposed to a facility near their home, with nearly two-thirds citing electricity costs. In New Jersey, a town successfully canceled a planned data center over energy and environmental concerns after average electricity bills there rose nearly 17% in one year. In Maine, legislators backed a bill to pause new data center construction until November 2027 to assess risks to the grid and environment. “If these centers aren’t thoughtfully planned and coordinated, they can place extraordinary demands on electric infrastructure, the surrounding environment and host communities,” said state Representative Melanie Sachs.
Edited by: Tamsin Walker