US energy giants Energy Transfer and Williams Cos. are in discussions with data center operators about building pipelines directly to their facilities to support onsite power generation, as reported by Bloomberg.
As the demand for data center power continues to surge, particularly due to the rapid growth of artificial intelligence (AI), many operators are considering onsite power generation as a viable solution to meet their increasing energy needs.
Marshall McCrea, co-CEO of Energy Transfer, mentioned during a call with analysts that the company is in talks with data centers of various sizes. These facilities are showing significant interest in generating their own power on-site. Energy Transfer is looking into expanding its existing connections to power plants and exploring new opportunities for connecting to additional plants.
Similarly, Williams Cos., a key competitor of Energy Transfer, is experiencing a surge in demand. CEO Alan Armstrong noted that the company is “overwhelmed with the number of requests” for pipeline connections, particularly in the southeastern US and mid-Atlantic regions. This surge includes Virginia, a major hub for data centers, where power demands have been especially challenging.
Dominion Energy, Virginia’s local power provider, reported that data centers accounted for 24 percent of its electricity sales in 2023, up from 21 percent in 2022. The utility highlighted that individual data center demands are growing from around 30MW to 60-90MW, while campus requests now range from 300MW to several gigawatts.
In January 2024, PJM Interconnection forecasted a nearly 40 percent increase in energy demand within its transmission zones over the next 15 years, largely driven by data center growth. Due to grid constraints, onsite power generation is increasingly becoming a necessary option for new data center developments to gain approval.
This trend mirrors developments in Ireland, where a de facto moratorium on new data center projects in the Dublin area led several operators to seek connections to the gas network instead of the electrical grid. In response, Ireland introduced a private wire policy, allowing companies to build their own transmission infrastructure to bypass grid bottlenecks.
