Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Economy

The Age of Electrons Has Arrived, but Maybe Not for the Right Reasons

A new report finds that utilities are spending more than fossil fuel companies to keep up with data center electricity demand.

Money.
Heatmap Illustration/Getty Images

The transition to clean energy is largely a shift from molecules to electrons — gasoline in the tank is out, electricity stored in a battery cell is in. It follows, then, that as the transition progresses, the balance of power in the energy industry will shift from oil and gas production to electricity generation.

We may look back on 2024 as the year the scales tipped. Among the top 260 publicly listed energy companies, utilities’ capital expenditures around the globe were slightly higher this year than oil and gas spending, according to a recent analysis from Boston Consulting Group, and the authors expect the trend to grow through the end of the decade. But it wasn’t a sudden spike in EV adoption or home electrification or some other climate solution that put utility spending in the lead. It was the rise in data centers.

“When we went through all the data, all the 260 companies, it was the data centers that were having the biggest impact, most definitely,” Rebecca Fitz, a partner and director at Boston Consulting Group and lead author of the report, told me. “I’ve been in this sector for a long time, and to have such a rapid change in demand outlook, coupled with quick changes to capex, is a big story.”

Boston Consulting Group Center For Energy Impact

The finding was the surprise headline of an annual report that Fitz’ group has completed for the past three years called “Follow the Capital,” an analysis of what’s driving changes in capital supply and demand in the energy sector using data culled from publicly available sources. Data for prior years comes from regulatory and investor fillings. Future years are modeled using public announcements, plans filed with regulators, and a few conservative assumptions, Fitz told me.

Surging demand for electricity from data centers was perhaps the biggest energy story of 2024, and the trend seemed to accelerate as the year went on. In just the past few months, almost every major tech company has signed an agreement to buy power from a nuclear plant, either reviving formerly shuttered reactors or helping to build new ones. GE Vernova, which manufactures energy generation equipment, reported last week that it had secured contracts for 9 gigawatts’ worth of new gas turbines since its previous quarterly report in October, “tied to both load growth in the U.S and … serving the hyperscaler demand associated with AI.” As the “Follow the Capital” authors were wrapping up this year’s edition in November, they found that U.S. utilities had added $50 billion in planned capex during the third quarter alone, mostly due to data center demand growth.

Data center demand isn’t the only factor playing into the above chart. Though utility spending is definitely up, oil and gas companies are also reining in capex growth in favor of shareholder returns, Fitz told me. But oil and gas also sees the winds changing and is making moves to get into the power business. Two weeks ago, during a panel hosted by the Atlantic Council, Chevron CEO Mike Wirth said the company was “looking at possible solutions to build large-scale power generation” that would serve data centers directly, rather than feed into the grid, so that regular electricity ratepayers would not shoulder the costs. “There’s sensitivity to increasing electricity rates for the average person just for the benefit of a few of these tech companies,” he said.

Beating Chevron to the punch, last week ExxonMobil announced that it was “moving fast” on this exact type of project, designing a natural gas plant that would “use carbon capture to remove more than 90% of the associated CO2 emissions” and directly power data centers without connecting to the grid.

“I have no doubt that most of the oil and gas sector is looking at opportunities in this area,” said Fitz.

Though the report covers global companies and spending, the data center demand signal is hyperlocal. Among the 30 largest North American utilities, 65% of demand growth is concentrated within just six of them, the report says. Though the report does not name the companies, Fitz told me that Texas, North Carolina, Virginia, and Ohio were seeing the most aggressive plans.

Artificial intelligence boosters often argue that this demand pull is a boon for the energy transition. By ushering in the age of electrons, the logic goes, tech companies with deep pockets can drive the first deployments of new clean energy technologies like advanced nuclear and geothermal power plants. These early deployments would then help lower costs and give rise to cheaper, cleaner electricity for the rest of us average energy consumers and our future electric cars, stoves, and water heaters.

But that’s not the only potential outcome. “Follow the Capital” found that when the six utilities most affected by demand growth recently revised their integrated resource plans, they increased the amount of natural gas generation they planned to add from 26% of total new generation to 31%. As GE Vernova reported, orders for gas generators are skyrocketing. “I can’t think of a time that the gas business has had more fun than they’re having right now,” the company’s CEO Scott Strazik said during a recent investor update.

As my colleague Matthew Zeitlin reported, the industry is turning to natural gas plants because they can run 24/7 and they are not as dependent on transmission lines as renewables are, so they can be built faster and more cheaply. Renewables paired with energy storage are only competitive with gas if there’s infrastructure to support it, sources told him.

The age of electrons may be nigh, but whether it helps to stop climate change is a separate question altogether.

Green

You’re out of free articles.

Subscribe today to experience Heatmap’s expert analysis 
of climate change, clean energy, and sustainability.
To continue reading
Create a free account or sign in to unlock more free articles.
or
Please enter an email address
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Energy

All the Nuclear Workers Are Building Data Centers Now

There has been no new nuclear construction in the U.S. since Vogtle, but the workers are still plenty busy.

A hardhat on AI.
Heatmap Illustration/Getty Images

The Trump administration wants to have 10 new large nuclear reactors under construction by 2030 — an ambitious goal under any circumstances. It looks downright zany, though, when you consider that the workforce that should be driving steel into the ground, pouring concrete, and laying down wires for nuclear plants is instead building and linking up data centers.

This isn’t how it was supposed to be. Thousands of people, from construction laborers to pipefitters to electricians, worked on the two new reactors at the Plant Vogtle in Georgia, which were intended to be the start of a sequence of projects, erecting new Westinghouse AP1000 reactors across Georgia and South Carolina. Instead, years of delays and cost overruns resulted in two long-delayed reactors 35 miles southeast of Augusta, Georgia — and nothing else.

Keep reading...Show less
Blue
Q&A

How California Is Fighting the Battery Backlash

A conversation with Dustin Mulvaney of San Jose State University

Dustin Mulvaney.
Heatmap Illustration

This week’s conversation is a follow up with Dustin Mulvaney, a professor of environmental studies at San Jose State University. As you may recall we spoke with Mulvaney in the immediate aftermath of the Moss Landing battery fire disaster, which occurred near his university’s campus. Mulvaney told us the blaze created a true-blue PR crisis for the energy storage industry in California and predicted it would cause a wave of local moratoria on development. Eight months after our conversation, it’s clear as day how right he was. So I wanted to check back in with him to see how the state’s development landscape looks now and what the future may hold with the Moss Landing dust settled.

Help my readers get a state of play – where are we now in terms of the post-Moss Landing resistance landscape?

Keep reading...Show less
Yellow
Hotspots

A Tough Week for Wind Power and Batteries — But a Good One for Solar

The week’s most important fights around renewable energy.

The United States.
Heatmap Illustration/Getty Images

1. Nantucket, Massachusetts – A federal court for the first time has granted the Trump administration legal permission to rescind permits given to renewable energy projects.

  • This week District Judge Tanya Chutkan – an Obama appointee – ruled that Trump’s Bureau of Ocean Energy Management has the legal latitude to request the withdrawal of permits previously issued to offshore wind projects. Chutkan found that any “regulatory uncertainty” from rescinding a permit would be an “insubstantial” hardship and not enough to stop the court from approving the government’s desires to reconsider issuing it.
  • The ruling was in a case that the Massachusetts town of Nantucket brought against the SouthCoast offshore wind project; SouthCoast developer Ocean Winds said in statements to media after the decision that it harbors “serious concerns” about the ruling but is staying committed to the project through this new layer of review.
  • But it’s important to understand this will have profound implications for other projects up and down the coastline, because the court challenges against other offshore wind projects bear a resemblance to the SouthCoast litigation. This means that project opponents could reach deals with the federal government to “voluntarily remand” permits, technically sending those documents back to the federal government for reconsideration – only for the approvals to get lost in bureaucratic limbo.
  • What I’m watching for: do opponents of land-based solar and wind projects look at this ruling and decide to go after those facilities next?

2. Harvey County, Kansas – The sleeper election result of 2025 happened in the town of Halstead, Kansas, where voters backed a moratorium on battery storage.

Keep reading...Show less
Yellow