AI-Driven Demand Boosts Natural Gas Prices, But Utilities Face Regulatory Risks

The natural gas market is undergoing significant changes due to growing demand from artificial intelligence (AI) data centers. According to BloombergNEF, natural gas consumption for data center power generation is expected to increase by 15 billion cubic feet per day in the next decade.

As a result, US data centers are projected to consume more natural gas than most countries currently use, based on estimates from the US Energy Information Administration. However, this increased demand may lead to rising prices and higher costs for consumers.

The low cost that made natural gas an attractive energy source for data centers may not last forever. Wood Mackenzie analysts warn that the decade of cheap Henry Hub gas is coming to an end, with prices forecasted to approach $5 per million British thermal units (MMBtu) in real terms by 2035.

Utilities such as Eversource are facing concerns over rising electricity prices and regulatory risks. CEO Joseph Nolan stated that the company is 'not interested in the data center buildout' in New England, citing increased costs for residential customers.