The United States now has the second-largest pipeline of gas-fired power plants in development globally, driven in part by speculation about future energy demand to fuel a burgeoning AI industry.
But this glut of new projects, many of which currently languish in the earliest phases, could lead to US$85 billion in stranded assets [1] if the gas demand bubble pops, according to a new analysis from Global Energy Monitor.
Data in the Global Oil and Gas Plant Tracker show that over the last year, the U.S. more than doubled its oil- and gas-fired capacity in development — projects in the announced, pre-construction, and construction phases — totalling over 85 gigawatts (GW). This increase has propelled the country to second in the world, behind China, for oil- and gas-fired projects in development.
If all in-development plants are built, the U.S.’ existing oil and gas fleet would grow by 15%, at an estimated cost of over US$85 billion in capital costs. If future AI power demand does not materialize, any new gas plants built risk becoming stranded assets and either being decommissioned before the end of their economic life or experiencing significant underutilization.
Roughly two thirds of in-development plants are located in states serviced by just three grid operators: the Electric Reliability Council of Texas (ERCOT), Midcontinent ISO (MISO) and PJM Interconnection (PJM). ERCOT covers most of Texas, MISO covers parts of 15 states, and PJM covers parts of 13 states and Washington DC.
With the gas power plant buildout facing longer construction timelines, supply constraints, and rising costs, renewables combined with battery storage are better positioned to meet an immediate rise in power demand. The levelized cost of electricity for solar and onshore wind is cheaper than any other source, including gas, in the U.S.
Jenny Martos, Project Manager for the Global Oil and Gas Plants Tracker at Global Energy Monitor, said, “With all the uncertainty around future AI energy demand, a bet this big on gas power is a risky one. Not only are construction costs and lead times for securing gas turbines increasing, but renewables and battery storage are ready now, fast to deploy and cheaper than building new gas power.”
