Nearly halfway through a decade deemed critical for slowing climate change, US utilities and investors plan to add 133 new natural gas-fired power plants to the nation's grid, according to S&P Global Market Intelligence data.

Another four oil-fired plants are under construction or in early development, and two coal-fired plants have been announced, the data shows.

The plans for new fossil fuel-based power generation come amid industrywide concern over a sudden and rapidly rising demand driven by electrification and industrial growth. In December 2023, grid regulators warned that power demand could outstrip supply in the coming decade, and consulting firm Grid Strategies declared that the "era of flat power demand is over."

Long-term natural gas investments also jeopardize the US pledge to cut economywide greenhouse gas emissions in half by 2030 and might increase the risk for stranded assets, some observers warned.

"We do need a significant decline in generation and emissions from gas in the power sector between now and 2035, and that's not what we're seeing when we look at these utility plans," said Lauren Shwisberg, a principal in the carbon-free electricity practice at RMI, a nonprofit focused on energy transition issues.

RMI's latest forecast projects an 18% increase in US natural gas-fueled power generation between 2024 and 2035, based on data from 121 utility resource plans.

'We need the gas capacity'

Limiting global warming to 1.5 degrees C above preindustrial levels requires cutting emissions across sectors by nearly 50% by 2030, the UN-affiliated Intergovernmental Panel on Climate Change said in March 2023.

In the US, however, carbon dioxide emissions from gas plants were 39% higher in 2023 than they were in 2017, according to the US Energy Information Administration. Also in 2023, CO₂ emissions from gas plants surpassed coal emissions for the first time.

The surge in datacenter energy use, boosted by the emergence of AI, has the energy industry "in a bit of a pickle," Ernest Moniz, head of the nonprofit energy research group EFI Foundation, said during a recent interview.

"There's some battery storage, there's some renewables, but the inability to [quickly] build electricity transmission infrastructure is a huge impediment. So we need the gas capacity," said Moniz, an outgoing board member at Southern Co.

Moniz, who was energy secretary during the Obama administration, commented after the April 30 release of an EFI Foundation report on the future of natural gas, sponsored in part by industry groups.

Natural gas still has a role to play in a decarbonized world, Moniz said. US utilities, meanwhile, are pushing forward with new natural gas projects. Ratepayer advocates, environmental groups and climate-minded corporate customers are closely watching their plans.

Billions in natural gas projects

Wisconsin Electric Power Co., a subsidiary of WEC Energy Group Inc., is asking state regulators to approve $2.1 billion in eventual rate increases for two new natural gas-fired plants, a liquefied natural gas storage facility, and 33 miles of pipelines that would serve the power plants. The new gas infrastructure will replace four coal units set to shut down by the end of 2025.

"We have a recent history of stranded costs after WEC built a coal plant just in the last 15 years, showing how much customers can be left holding the bag for such investments," Tom Content, executive director of the Citizens Utility Board of Wisconsin, said in an interview. "This is a concern."

In Arizona, the Salt River Project (SRP) is moving forward with plans to add 2 GW of gas-fired generation by 2035, SRP spokesperson Jennifer Schuricht confirmed in an email. The new natural gas generation in the Phoenix area is needed to integrate 9.5 GW of renewables and storage and to offset the retirement of more than 1.3 GW of coal-fired capacity as demand soars an estimated 40% over the next decade, SRP said.

The Sierra Club, Arizona Solar Energy Industries Association and other groups criticized the utility for a plan they said will "exacerbate the water crisis, drive costs up for ratepayers and contribute to the climate crisis." Schuricht said SRP picked the resource plan after conducting two customer surveys and analyzing 42 alternative plans, finding that a no-gas option would not provide reliable service or affordable bills.

Utilities are pushing hardest for new natural gas generation in Texas and the Southeast.

Duke Energy Corp.'s January update to its resource plans for the Carolinas calls for 10 new natural gas-fired units to come online by 2033 with a combined capacity of nearly 9 GW, after concluding that peak load growth will be eight times higher by 2030 than Duke Energy projected just two years earlier.

The "hydrogen-capable" natural gas plants, together with more solar and energy storage resources and offshore wind, will contribute to the company's target of reaching carbon neutrality by 2050, Duke said in a fact sheet. Even so, dozens of residents raised questions about the utility's updated plan at public hearings held in North Carolina in April, including the company's estimate that renewables costs had risen 20%.

Regulators' options limited

Also in April, Microsoft argued that the energy forecasts in Georgia Power Co.'s 2023 integrated resource plan could be "leading to over-forecasting near-term load (through 2030) and procuring excessive, carbon-intensive generation." The tech company's datacenters are Georgia Power customers and will be running on 100% renewable energy by 2025, Microsoft wrote.

The Georgia Public Service Commission nonetheless approved the utility's proposal for more than 1.4 GW of new natural gas and oil-fired power generation to be built by 2027. The natural gas investments are expected to cost Georgia Power's customers about $3 billion, according to estimates by the Southern Environmental Law Center, which also intervened in the case.

In states with no emissions reduction laws on the books, utility regulation continues like it always has, said Mike O'Boyle, senior director of the electricity program at think tank Energy Innovation.

"The evidence they have to rule on is only based on cost," O'Boyle said during an interview. "[It] really limits regulators' ability to consider climate benefits for planning."

A recent Energy Innovation study urged utility regulators not to join the "panicked rush" to add new gas generation but instead consider energy efficiencies and other technologies available today.

"The plans and commitments and analysis and science that we've done to determine that we have to decarbonize are real and important," said David Pomerantz, executive director of Energy and Policy Institute, a utility watchdog group. "And then you build a gas plant. I don't see an actual way for them to sit on the fence of those two things, which is what the utilities have tried to do."