Overview
America's power grid is facing its biggest stress test in decades. Data centers running AI models consumed 183 terawatt-hours in 2024—enough to power Pakistan for a year—and that figure is expected to more than double by 2030. Microsoft, Google, Amazon, and Meta are pouring $370 billion into new facilities, and the grid can't keep up.
The answer utilities are betting on: natural gas, fast. While solar and batteries will dominate new capacity additions, gas-fired plants can be built in two years versus a decade for transmission lines. ONE Gas's $160 million Oklahoma pipeline is just one piece of a nationwide infrastructure sprint to deliver fuel to hundreds of new power plants before the grid buckles. In PJM's electricity market alone, data centers drove capacity prices up ninefold in one year, adding $9.3 billion to customer bills.
Key Indicators
People Involved
Organizations Involved
One of the largest natural gas utilities in the United States, serving 2.3 million customers across Kansas, Oklahoma, and Texas.
Oklahoma's largest locally owned power supply system, serving 21 distribution cooperatives across four states.
Grid operator covering 13 states from Illinois to North Carolina, serving 65 million people.
Timeline
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ONE Gas Announces $160M Oklahoma Pipeline
Infrastructure43-mile pipeline from Bennington Hub to Hugo Plant will deliver 100+ BCF annually, supporting 400 MW gas generation by 2029. Completion targeted Q3 2028.
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Residential Power Bills Jump in PJM Region
Consumer ImpactPepco customers in DC see $21/month increase; Maryland and Ohio residents face $16-18/month hikes, half attributed to capacity market prices.
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Big Tech Announces $370B AI Infrastructure Spend
InvestmentMicrosoft, Alphabet, Meta, and Amazon commit massive capital expenditures for data center expansion throughout 2025.
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PJM Auction Reaches Price Cap at $333/MW-Day
Market SignalLatest capacity auction for 2027/2028 hits maximum allowed price across entire region. Grid falls 6,625 MW short of reliability target.
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WFEC Breaks Ground on Anadarko Expansion
InfrastructureWestern Farmers Electric begins gas generation expansion at Anadarko plant, part of broader capacity buildout strategy.
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PJM Capacity Auction Hits $329/MW-Day
Market SignalCapacity prices for 2026/2027 delivery jump 22% from prior year, driven by data center demand. Total cost: $16.1 billion.
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US Data Centers Consume 183 TWh
Demand MilestoneData centers account for 4% of total US electricity use, equivalent to Pakistan's annual consumption. Demand expected to more than double by 2030.
Scenarios
Natural Gas Becomes the Grid's Lifeline Through 2030
Discussed by: Goldman Sachs Research, U.S. Energy Information Administration, International Energy Agency
Utilities across the country follow Oklahoma's playbook, building out natural gas infrastructure and generation capacity as the fastest path to meeting AI-driven electricity demand. The EIA forecasts 4.4 GW of new gas capacity in 2025, rebounding from a dismal 1 GW in 2024, with momentum building through the decade. Natural gas accounts for over 40% of new electricity supply for data centers through 2030, according to the IEA, while renewable energy projects face permitting delays and transmission bottlenecks. Residential electricity bills rise 15-25% by 2028 across major markets, but grid reliability holds. Carbon emissions from the power sector plateau rather than declining as planned.
Tech Giants Pivot to On-Site Power, Bypassing Utilities
Discussed by: Industry analysts at TechCrunch, statements from Microsoft and Amazon on nuclear partnerships
Frustrated by transmission delays and skyrocketing capacity prices, Big Tech accelerates investments in on-site generation—small modular reactors, industrial-scale solar-plus-storage, and dedicated natural gas plants. Microsoft's nuclear partnerships and Amazon's data center power deals signal a shift away from reliance on the traditional grid. Utilities lose their most lucrative customers, leaving residential ratepayers to shoulder the cost of stranded transmission investments. ONE Gas's Hugo pipeline project succeeds, but similar utility-led infrastructure projects in other regions face cancellation as load forecasts are revised downward. The grid becomes bifurcated: premium private infrastructure for tech companies, aging public infrastructure for everyone else.
Demand Forecasts Prove Wildly Overstated, Leaving Stranded Assets
Discussed by: EIA demand forecast revisions, utility industry skepticism reported by CNBC and Utility Dive
By 2027, it becomes clear that utilities overestimated AI data center growth. Efficiency improvements in chip design, economic recession dampening tech investment, or regulatory constraints on data center energy use cause demand to plateau well below projections. PJM's 32 GW growth forecast proves to be closer to 10 GW. Natural gas pipelines like ONE Gas's $160 million Oklahoma project operate at 40-50% capacity utilization. Capacity auction prices collapse back to pre-2024 levels, triggering utility writedowns and regulatory battles over who pays for infrastructure built on faulty assumptions. Oklahoma ratepayers end up subsidizing underutilized pipeline assets through regulated rate recovery.
Federal Intervention Forces Renewables-First Approach
Discussed by: Environmental advocates at Sierra Club, Democratic senators questioning Big Tech
Growing political backlash over rising electricity bills and carbon emissions prompts federal action. Congress conditions federal support for data centers on commitments to renewable energy and storage, while the EPA tightens emissions standards on new gas-fired generation. Transmission reform legislation passes, accelerating renewable energy interconnection. The ONE Gas pipeline project proceeds but faces regulatory delays and additional environmental review requirements. By 2030, natural gas provides only 20% of new data center electricity rather than the projected 40%, with the balance coming from solar, wind, storage, and demand management. Infrastructure costs remain high but carbon trajectory improves.
Historical Context
The Late 1990s Power Plant Building Boom
1997-2002What Happened
State electricity deregulation combined with historically cheap natural gas prices triggered a massive buildout of gas-fired power plants across the United States. Utilities and independent power producers assumed natural gas would remain cheap indefinitely, investing billions in combined-cycle and simple-cycle turbines. Over 200 GW of new gas capacity was proposed, with significant construction concentrated in deregulated markets like Texas, the Northeast, and California.
Outcome
Short term: Natural gas prices spiked unexpectedly from $2-3/MMBtu in the late 1990s to over $10/MMBtu by 2005, making many new plants uneconomical and leading to bankruptcy for several independent power producers.
Long term: The gas infrastructure built during this period became the backbone of the modern grid's flexibility, enabling the integration of variable renewable energy two decades later. The boom-bust cycle taught utilities painful lessons about commodity price risk.
Why It's Relevant
Today's infrastructure sprint mirrors the late 1990s optimism about a single fuel source meeting surging demand. Then it was cheap gas enabling deregulation; now it's AI-driven load growth requiring fast-build generation. The question is whether history will repeat with price volatility or stranded assets.
PJM's First Capacity Crisis (2007-2008)
2007-2008What Happened
PJM faced its first major capacity shortage as economic growth, inadequate transmission, and delays in new generation created supply concerns. Capacity auction prices spiked from $40/MW-day to $111/MW-day for 2008/2009 delivery, tripling overnight. Utilities and regulators scrambled to ensure grid reliability while managing the political fallout from rising consumer electricity costs.
Outcome
Short term: The price spike incentivized rapid construction of peaking plants and demand response programs, adding over 10 GW of capacity within two years and stabilizing the market.
Long term: PJM implemented market reforms and reliability standards that worked effectively for a decade, keeping capacity prices relatively stable until the 2024 data center surge overwhelmed the system again.
Why It's Relevant
The 2007-2008 capacity crisis was resolved through a combination of market signals and rapid infrastructure response. The current crisis is an order of magnitude larger—PJM forecasts 32 GW of growth versus 10 GW then—raising questions about whether the same playbook will work or if more fundamental grid transformation is needed.
The Shale Gas Revolution and Infrastructure Scramble (2010-2015)
2010-2015What Happened
Hydraulic fracturing technology unlocked vast natural gas reserves in the Marcellus, Utica, Permian, and other shale formations, causing US gas production to surge 35% in five years. Prices collapsed from $8/MMBtu to under $3/MMBtu. However, the infrastructure to transport gas from remote production areas to demand centers lagged badly, creating regional price disparities and bottlenecks. Pipeline companies rushed to build takeaway capacity, investing over $50 billion in new midstream infrastructure.
Outcome
Short term: By 2015, major pipeline projects like the Rover and Atlantic Sunrise began alleviating bottlenecks, allowing cheap Appalachian gas to reach Northeast and Midwest markets. Power generators accelerated coal-to-gas switching.
Long term: The infrastructure buildout enabled the US to become the world's largest natural gas producer and LNG exporter by 2023. Abundant, cheap gas reshaped electricity generation, reducing coal's share from 45% in 2010 to under 20% by 2024.
Why It's Relevant
ONE Gas's Oklahoma pipeline fits the pattern of infrastructure racing to connect supply to surging demand. The shale revolution taught the industry that production can scale faster than pipelines, creating temporary bottlenecks. Today's challenge is the reverse: can pipeline and generation infrastructure scale fast enough to meet data center load growth that's doubling every few years?