Grid challenges make dedicated gas generation best option for data centers: Kinder Morgan

Kinder Morgan expects incremental demand for natural gas from data centers will be 3-6 Bcf/d by 2030, and sees dedicated gas-fired power stations as a preferable supply option to grid power.

Forecast for incremental data center demand out to 2030 have come in a wide range of zero-16 Bcf/d, Will Brown, chief commercial officer for Kinder Morgan's West Region, said Aug. 15 at the LDC Gas Forums' Rockies and West Forum in San Diego.

"We think it's somewhere around three to 6 Bcf between now and the end of the decade," Brown said. Kinder Morgan is "on the low side" because of the challenges in scaling up power infrastructure.

So-called hyperscalers like Google and Meta "are extremely aggressive," Brown said. "They're going to the utilities, and the utilities are saying, 'I ain't got it. I'm not going to have it for a few more years.'"

Regulatory issues with dedicating grid power to data centers could slow down development. Independent Power Producers "are going to have a challenge if they want to pull capacity out of the ISO and support a data center," Brown said. "The ISOs are going to say 'wait a second, that power plant not only provides capacity but provides inertia, provides frequency support, provides a variety of things.'"

Kinder Morgan sees this as creating an opportunity for pipeline providers to supply new power stations specifically dedicated to data centers.

"It makes a heck of a lot more sense in our in our estimation, to associate a power plant next to a data center coming directly off a pipeline," Brown said. Data centers "are going to be developed where there's abundant amount of gas and dedicated infrastructure."

Infrastructure issues

Brown acknowledged that building out infrastructure to meet rising power demand could be a sticking point.

"It's starting to get even more difficult to build infrastructure in the US," he said. Recent DC Circuit Court decisions (opens in a new tab)vacating Federal Energy Regulatory Commission authorizations came "out of left field... we're going to have to just see how all that shakes out."

Brown said he expects "the almighty dollar" to ultimately prevail and drive infrastructure. "Its going to take price response to initiate new infrastructure build." He pointed to last year's decision by the California Public Utilities Commission to significantly expand the allowed working gas capacity at Aliso Canyon(opens in a new tab). "You've seen in California the adults getting back in the room." This year, California "has been enjoying ... sub $3 [per MMBtu] gas; its been a long time since we've seen that."