Sign In or Create an Account.

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

Technology

Would You Like a Gas-Fired Power Plant With That Data Center?

CoreWeave signed a deal for a new facility in New Jersey, behind-the-meter power on the side.

A gas plant and retro loading.
Heatmap Illustration/Getty Images

The cloud computing company CoreWeave announced Monday that it is leasing a former medical research facility and turning it into a data center. Along with it comes a 25-megawatt power plant that once provided power and steam directly to the former Merck headquarters in Kenilworth, New Jersey, but began to sell more and more power to the grid, the plant’s owner said in a filing with the Federal Energy Regulatory Commission. In 2023, the facility was purchased by Onyx, a real estate firm, and Machine Investment Group, with the intention to market the site to another life sciences or biotechnology company.

Then the AI revolution happened.

CoreWeave, which started as a miner of cryptocurrency, is now raising and spending billions of dollars to acquire and install the chips necessary to train and run artificial intelligence systems for companies that rent out access to them. According to the deal announcement, the company plans to pour $1.2 billion of investment into the 280,000 square foot facility, along with electrical upgrades from the utility PSE&G and investments from Onyx. The power plant will stop serving the grid and go “behind the meter,” the plant’s owner Atlantic Power said in a letter to PJM Interconnection, the regional electricity market, in September.

The deal confirms that when it comes to power, data centers will take what they can get — and that the long timelines necessary to bring on new power in much of the country may end up benefiting existing owners of generation, especially natural gas.

Data centers require both large amounts of power — sometimes 100 megawatts or more — and the ability to surge up and down quickly. “Renewable power generation is well placed to capture mounting demand from data centers and AI in the long term,” analysts at BNEF wrote in a report in September, “but time constraints for grid interconnection and intermittency issues could support natural gas-fired output.”

Goldman Sachs analysts expect data center power demand to rise from about 3% of the U.S. total to 8% by 2030, with growth running at 15% annually. They assume that capacity will be met mostly by natural gas, but actually finding — let alone building — new natural gas generation is a challenge.

“The hyperscalers are evolving from single data centers dependent on 60 to 100 megawatts to starting to look at multiple gigawatt-size data center parks that support a number of data centers in one location,” GE Vernova chief executive Scott Strazik said on a recent earnings call with analysts.

Building a new natural gas plant on the grid — and especially the transmission infrastructure to serve it — can be a prospect well beyond the build-it-now timelines of big technology companies with a desperate need for computing power.

“Thanks to 10-year delays in permitting for new transmission lines and connecting generation capacity to the grid, the most viable near-term option is behind-the-meter,” Tim Fist and Arnab Datta wrote in a report for the Institute for Progress, a technology and science policy think tank. In other words, one way to get around grid interconnection and intermittency issues is to have your own power plant.

“The economics of developing the power on site don't really hurt the data center economics that much. These things are just really profitable,” Carson Kearl, an analyst at Enverus, told me.

Some data centers have developed their own natural gas generation on site, such as XAi’s cluster in Memphis, Tennessee, which is powered by gas generators.

CoreWeave, meanwhile, is one of the most talked-about and well-funded companies in cloud computing, with access to a huge number of chips made by Nvidia, the leading designer of high-end processors, and which is also an investor in CoreWeave. But the chips can only perform when they’re powered, turning the data center business into a hunt for electricity wherever it can be found.

“Access to reliable power could be a roadblock towards the timely buildout” for a data center, Francois Poirier, the chief executive of TC Energy, the Canadian pipeline company, told analysts on an earnings call in August. “We’re seeing a shift in siting preferences from regions where big telecom infrastructure is in place to regions where energy and supply infrastructure is in place.”

CoreWeave, PSE&G, Onyx, and Atlantic Power’s owner, I Squared Capital, did not respond to requests for comment.

This situation has not come about for lack of effort on the part of the several electricity markets that have been trying to get new natural gas generation on the grid. PJM, for example, has been working to entice new supply, but even following a record auction for power capacity that paid out billions to natural gas plants, few producers have indicated their willingness to make large new investments. Texas has established a multibillion-dollar loan fund to provide low-cost financing to new natural gas plants.

While several large technology companies have announced their intention to buy nuclear power from refurbished or new plants, those deals will take at least several years to actually get any new electrons on the grid.

That leads data center developers like CoreWeave scrambling to find what power they can. In interviews, the company’s chief strategy officer Brian Venturo told Wired that they are avoiding Northern Virginia’s “data center alley” precisely because it’s “a food fight to get power.”

“There's a lot of growing backlash in that market around power usage,” he told Bloomberg. “We're kind of siting our plants and markets where our data centers and markets where we think the grid infrastructure is capable of handling it.”

And what better place than where the power already is.

Blue

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

The Pentagon’s Rare Earths Deal Is Making Former Biden Officials Jealous

The multi-faceted investment is defense-oriented, but could also support domestic clean energy.

A rare earths mine.
Heatmap Illustration/MP Materials, Getty Images

MP Materials is the national champion of American rare earths, and now the federal government is taking a stake.

The complex deal, announced Thursday, involves the federal government acting as a guaranteed purchaser of MP Materials’ output, a lender, and also an investor in the company. In addition, the Department of Defense agreed to a price floor for neodymium-praseodymium products of $110 per kilogram, about $50 above its current spot price.

Keep reading...Show less
Blue
Economy

AM Briefing: A Second Wind for Lava Ridge?

On a new plan for an old site, tariffs on Canada, and the Grain Belt Express

Site of Idaho’s Lava Ridge Wind Project May Be Used for SMRs
Heatmap Illustration/Getty Images

Current conditions: Phoenix will “cool” to 108 degrees Fahrenheit today after hitting 118 degrees on Thursday, its hottest day of the year so farAn extreme wildfire warning is in place through the weekend in ScotlandUniversity of Colorado forecasters decreased their outlook for the 2025 hurricane season to 16 named storms, eight hurricanes, and three major hurricanes after a quiet June and July.

THE TOP FIVE

1. Trump threatens 35% tariff on Canada

President Trump threatened a 35% tariff on Canadian imports on Thursday, giving Prime Minister Mark Carney a deadline of August 1 before the levies would go into effect. The move follows months of on-again, off-again threats against Canada, with former Canadian Prime Minister Justin Trudeau having successfully staved off the tariffs during talks in February. Despite those earlier negotiations, Trump held firm on his 50% tariff on steel and aluminum, which will have significant implications for green manufacturing.

Keep reading...Show less
Yellow
Climate Tech

The Software That Could Save the Grid

Or at least the team at Emerald AI is going to try.

Technology and power.
Heatmap Illustration/Getty Images, Emerald AI

Everyone’s worried about the ravenous energy needs of AI data centers, which the International Energy Agency projects will help catalyze nearly 4% growth in global electricity demand this year and next, hitting the U.S. power sector particularly hard. On Monday, the Department of Energy released a report adding fuel to that fire, warning that blackouts in the U.S. could become 100 times more common by 2030 in large part due to data centers for AI.

The report stirred controversy among clean energy advocates, who cast doubt on that topline number and thus the paper’s justification for a significant fossil fuel buildout. But no matter how the AI revolution is powered, there’s widespread agreement that it’s going to require major infrastructure development of some form or another.

Keep reading...Show less