U.S. Data Center Power Demand Growth: Gas Price Outlook

• 2024-08-21
• News

According to the Electric Power Research Institute (EPRI), from 2020 to the present, the demand for cloud services, big data analytics, and artificial intelligence technologies has been continuously expanding, requiring a significant amount of computing resources, while the improvement in efficiency has been slowing down, leading to a new phase of increased electricity demand. Natural gas power generation is a primary method of electricity generation in the United States. In an ultra-optimistic scenario, the future of natural gas in the U.S. will be in a slight de-stocking phase; in optimistic/neutral/pessimistic scenarios, U.S. natural gas may continue to accumulate stocks, but the magnitude will be less than that of the 2023/2024 levels.

1. Impact of U.S. Data Centers on Natural Gas

According to the EPRI, from 2020 to the present, the demand for cloud services, big data analytics, and artificial intelligence technologies has been continuously expanding, requiring a significant amount of computing resources, while the improvement in efficiency has been slowing down, leading to a new phase of increased electricity demand.

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Natural gas power generation is a primary method of electricity generation in the United States. This article will discuss how U.S. data centers affect electricity demand and what impact they will have on the demand for natural gas.

2. How will U.S. Data Centers Drive Electricity Demand?

EPRI has assumed four scenarios for the expansion of data centers. Under ultra-optimistic/optimistic/neutral/pessimistic scenarios, the electricity demand for U.S. data centers in 2030 will be 403.9/296.4/214.0/196.3 TWH, with a compound annual growth rate of 15%/10%/5%/3.7%.

Under ultra-optimistic/optimistic/neutral/pessimistic scenarios, the electricity generation demand for the U.S. in 2030 will be 4323/4224/4149/4133 TWH, with a compound annual growth rate of 1.1%/0.8%/0.5%/0.5%. The forecast for the demand pull of U.S. natural gas power generation is a compound annual growth rate of 1.1%/0.8%/0.5%/0.5%.

3. How to Look Forward to the Future Supply and Demand Forecast of Natural Gas?

Conclusion: In the ultra-optimistic scenario, the future of U.S. natural gas will be in a slight de-stocking phase; in optimistic/neutral/pessimistic scenarios, U.S. natural gas may continue to accumulate stocks, but the magnitude will be less than that of the 2023/2024 levels.

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ENN Energy Holdings (600803.SH): (Co-covered with the utilities team) The company's natural gas business includes direct sales, retail, and wholesale. The direct sales of natural gas mainly involve the procurement of international natural gas resources. According to the company's Q1 2024 earnings call materials, ENN has signed long-term agreements with TotalEnergies, Chevron, Cheniere, and others for 10.16 million tons, securing relatively cheaper natural gas resources.