In the United States, natural gas generation will remain a cornerstone firm capacity resource into the coming decades. The need for existing and new natural gas generation is being propelled by a range of factors including age-based coal generation retirements, generation repowering, environmental considerations, economics and load growth. Artificial Intelligence (AI) based data centers and future manufacturing reshoring are driving projected record electric load growth in the United States.
These types of loads often do not have traditional on and off-peak behavior, which can be challenging for a combination of renewable generation and storage to accommodate. While research is on-going in terms of optimizing data center load profiles around renewable production cycles, the need for fully dispatchable generation over multi-day periods is growing. Because of these considerations, natural gas generation will continue to complement renewable generation and storage installations into the distant future.
Due to these factors large-scale combined cycle gas turbines (CCGTs) are once again emerging as a popular alternative within utility integrated resource plans (IRPs). While supply chain constraints for CCGTs are expected to remain tight through the 2030s, the need for dispatchable baseload resources continues to increase. The 2025 PJM capacity auction cleared at its maximum price cap, demonstrating the need for new firm generation (PJM Interconnection, 2024). While PJM contains “data center alley”, the shortage of generation capacity is occurring for most ISOs.
Both smaller simple cycle gas turbines (SCGTs) and CCGTs are being pursued to accommodate load growth. Many recent utility IRPs are showing a propensity to select these alternatives when new data centers are introduced to the system. Challenges are arising though in that while SCGTs have a shorter procurement window, their operational economics are not as favorable compared to CCGTs. The current supply for CCGTs cannot keep up with demand, and as such there is a growing backlog in orders. General Electric and other gas turbine developers are expanding their manufacturing capabilities, but the supply chain squeeze is expected to continue into the near future.
In addition to the issues with gas turbine supply, there is a growing concern related to the price of electricity across the United States. Public utility commissions are sensitive to the risk of both stranded investments tied to powering data centers, as well as passing capital construction costs to utility customers. Due to these concerns, data center developers are often choosing to partially bring their own generation resources rather than fully relying on utility power purchases. Recent discussion in the ERCOT surrounding the potential to allow for the interruption of data center loads up to fifty percent are amplifying the need for data center developers to explore alternative options.
Early analyses and studies can help clients face these challenges through quantifying opportunities and risk associated with natural gas generation; in particular, it’s important to find a partner who is capable of studying a combination of utility scale or behind-the-meter natural gas or hybrid resources to help accommodate hyperscale or more traditional electric loads. Ulteig’s team of experts has the experience and technology to offer services and studies to support the clients’ needs, including:
Capacity Expansion Analysis – Ulteig’s team of resource planning experts help clients determine the best alternatives to supply a given load, including hyperscale. A variety of alternatives ranging from natural gas reciprocating generators, SCGTs, CCGTs, renewables, storage and any other relevant sources are considered. An exploration is completed for best options related to full grid interconnection or partial/full islanding constrained by both economics and reliability.
Transmission Interconnection and Power Market Risk Review – Ulteig can perform detailed analysis related to generator and load interconnection. This includes understanding and quantifying the impact from NERC and ISO interconnection requirements. In addition, Ulteig can perform full transmission congestion and load/resource curtailment risk assessment based upon security constrained economic dispatch (SCED) and security constrained economic commitment (SCUC). The combination of these studies will enable the understanding of interconnection and operational risk subject to transmission contingency. This analysis is a full suite and can accommodate purely natural gas resources or a hybrid blend of alternatives in conjunction with associated loads.
Rate and Tariff Impact Analysis – To complement the capacity expansion analysis, Ulteig can perform utility rate and tariff impact analysis to move from planning to full life cycle costing. A full review of relevant utility and ISO rates and tariffs is performed to ensure all information is provided with lucid diagrams that are illustrative of detailed technical reports and write-ups.
The energy industry is evolving faster than ever before and the need for every more electrons on the grid is an open-ended challenge. Ulteig is helping clients face these challenges head-on.
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