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Data centers drive buildout of gas power plants and pipelines in the Southeast

January 29, 2025
Cathy Kunkel
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Key Findings

Southeastern United States utilities and gas pipeline developers are planning a major infrastructure buildout, in large part due to data center demand.

Utilities and pipeline developers appear poised to overbuild gas infrastructure in the Southeast.

Southeast consumers are subsidizing the growth of the data center industry and the major tech companies behind it.

Data center growth forecasts are incompatible with necessary action on climate change.

Executive Summary

Southeast utilities and pipeline companies are planning a major buildout of natural gas infrastructure (pipelines and power plants) over the next 15 years. This report focuses on the states of Virginia, North Carolina, South Carolina and Georgia. Utilities in these states plan to build more than 20,000 megawatts (MW) of natural gas power plants by 2040.

Meanwhile, pipeline operators are currently proposing or constructing more than 3,300 million cubic feet (MMcf)/day of new pipeline capacity through these states. More than 75% of this capacity is destined for electric utilities. More pipeline capacity will be needed if the Southeast utilities’ natural gas power plant plans come to fruition over the coming decades.

The main driver of this dash to build new gas infrastructure is data centers. The Southeast utilities profiled in this report are forecasting a level of load growth unprecedented in the last two decades in large part attributable to projections of rapid data center expansion. IEEFA finds that:

  • Major utilities in Virginia, North Carolina, South Carolina and Georgia are collectively forecasting the addition of 32,600 MW of electrical load over the next 15 years.
  • The major driver of this load growth—particularly in Virginia, South Carolina and Georgia—is data centers. In these three states, data centers are responsible for 65% to more than 85% of projected load growth.
  • There is a significant risk of Southeast utilities overbuilding power plants and pipelines in response to projected data center energy demand. Utilities already are financially incentivized to overbuild infrastructure. This risk is exacerbated by the uncertainty over whether data center demand will materialize at the levels forecasted, in part due to the questions around the financial viability of artificial intelligence (AI).
  • Ratepayers are subsidizing the cost of electrical infrastructure being built to serve data centers, and this subsidization will worsen if infrastructure is overbuilt.
  • The focus on building out electrical infrastructure, including gas infrastructure, to serve data centers is slowing the energy transition.

Cathy Kunkel

Cathy Kunkel is an Energy Consultant at IEEFA.

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