Gas Is Letting Data Centers Grow Beyond the Grid

Data center power demand is rapidly outpacing grid infrastructure, forcing developers to adopt on-site gas generation to bypass multi-year interconnection delays. With 141 gigawatts of projects announced globally, primarily in the United States, this trend prioritizes speed to market over cost-efficiency. While gas turbines currently offer the lowest levelized cost of electricity at $103 per megawatt-hour, developers also utilize engines and fuel cells to balance specific needs like load flexibility and emissions targets. However, the market faces significant risks, including equipment supply chain bottlenecks and the long-term economic uncertainty of these assets once grid connections eventually materialize. Musfika Mishi, an analyst from BloombergNEF’s technology and innovations team, notes that while on-site gas serves as a critical bridge, its future role depends on evolving grid capacity, regulatory environments, and the continued growth of the data center industry itself.