The Country’s Largest Power Markets Are Getting More Gas

Two of the biggest electricity markets in the country — the 13-state PJM Interconnection, which spans the Mid-Atlantic and the Midwest, and ERCOT, which covers nearly all of Texas — want more natural gas. Both are projecting immense increases in electricity demand thanks to data centers and electrification. And both have had bouts of market weirdness and dysfunction, with ERCOT experiencing spiky prices and even blackouts during extreme weather and PJM making enormous payouts largely to gas and coal operators to lock in their “capacity,” i.e. their ability to provide power when most needed.

Now a trio of companies, including the independent power producer NRG, the turbine manufacturer GE Vernova, and a subsidiary of the construction firm Kiewit Corporation, are teaming up with a plan to bring gas-powered plants to PJM and ERCOT, the companies announced today.

The three companies said that the new joint venture “will work to advance four projects totaling over 5 gigawatts” of natural gas combined cycle plants to the two power markets, with over a gigawatt coming by 2029. The companies said that they could eventually build 10 to 15 gigawatts “and expand to other areas across the U.S.”

So far, PJM and Texas’ call for new gas has been more widely heard than answered. The power producer Calpine said last year that it would look into developing more gas in PJM, but actual investment announcements have been scarce, although at least one gas plant scheduled to close has said it would stay open.

So far, across the country, planned new additions to the grid are still overwhelmingly solar and battery storage, according to the Energy Information Administration, whose data shows some 63 gigawatts of planned capacity scheduled to be added this year, with more than half being solar and over 80% being storage.

Texas established a fund in 2023 to provide low-cost loans to new gas plants, but has had trouble finding viable projects. Engie pulled an 885 megawatt project from the program earlier this week, citing “equipment procurement constraints” and delays.

But PJM is working actively with a friendly administration in Washington to bring more natural gas to its grid. The Federal Energy Regulatory Commission recently blessed a PJM plan to accelerate interconnection approvals for large generators — largely natural gas — so that it can bring them online more quickly.

But many developers and large power consumers are less than optimistic about the ability to bring new natural gas onto the grid at a pace that will keep up with demand growth, and are instead looking at “behind-the-meter” approaches to meet rising energy needs, especially from data centers. The asset manager Fortress said earlier this year that it had acquired 850 megawatts of generation capacity from APR Energy and formed a new company, fittingly named New APR Energy, which said this week that it was “deploying four mobile gas turbines providing 100MW+ of dedicated behind-the-meter power to a major U.S.-based AI hyperscaler.”

And all gas developers, whether they’re building on the grid or behind-the-meter, have to get their hands on turbines, which are in short supply. The NRG consortium called this out specifically, noting that it had secured the rights to two 7HA gas turbines by 2029. These kinds of announcements of agreements for specific turbines have become standard for companies showing their seriousness about gas development. When Chevron announced a joint venture with GE Vernova for co-located gas plants for data centers, it also noted that it had a reservation agreement for seven 7HA turbines. But until these turbines are made and installed, these announcements may all just be spin.