Noreva projects US natural gas prices to triple in parts of US in coming years
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US natural gas prices are projected to triple in some regions of the country in coming years, according to energy research firm Noreva, as demand from AI data centers collides with slower supply growth and rising LNG exports. Hyperscalers including Amazon, Google, Meta and Microsoft may see fuel costs double or triple for gas-fired power plants tied to their data center ambitions. Spot prices currently range from about $2 to $4.50 per million BTU, with the Henry Hub benchmark just under $3.
Hyperscaler Gas Commitments
Meta said in March it would build a 7.5-gigawatt natural gas power plant in Louisiana to power its Hyperion data center. Microsoft and Google each announced gigawatt-scale gas plants in Texas days later, and Amazon plans a 7.6-gigawatt gas plant in Texas. The projects mark a shift by companies that historically avoided large capital expenditures into physical energy infrastructure they are less familiar with.
Noreva's Price Forecast
Noreva expects natural gas prices to rise above $10 per million BTU in certain delivery hubs, compared with a current range of about $2 to $4.50 and a Henry Hub price of just under $3. CEO Peter Gardett told TechCrunch that energy markets have been 'lulled into a sense that gas prices can’t go up.' Gardett said simple arithmetic points to a much tighter gas market than a few years ago.
Data Center Cost Exposure
Fuel accounts for about half the cost of electricity from a large power plant, so a doubling or tripling of gas prices could raise operating costs for 'bring your own power' AI data centers accordingly. Higher fuel costs could raise token costs or push hyperscalers to connect to the grid, driving electricity prices higher. Natural gas futures currently do not anticipate major changes, but Gardett said that is not an unreasonable bet and he remains skeptical.
What's Next
Noreva expects energy companies to add new supplies, though at a slower pace than in previous years, while futures markets currently price in stable natural gas. It remains unclear whether hyperscalers will hedge against a possible tripling of fuel costs or shift data center loads to the grid if Noreva's forecast proves correct.
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Noreva projects US natural gas prices to triple in parts of US in coming years
