by Charlie Burd, Rob Brundrett and Dave Callahan
The recent surge in data centers powering artificial intelligence (AI) and advanced manufacturing throughout our region means a herculean need for new power generation. Technology companies like Amazon, Google, Facebook and Intel, along with advanced manufacturers have announced massive investments in the region, and they’re all going to need more electrons.
The good news is, thanks to the abundant natural gas beneath our feet, we can meet this new energy demand and continue our manufacturing renaissance — while also advancing a cleaner energy economy.
AEP Ohio recently compared the coming electricity demand from data centers in the region to the power usage of Manhattan. They cite that an average annual load growth of 1%-2% year over year is now closer to 20%, with expected total electricity demand to double by 2028.
This booming demand isn’t unique to Appalachia, either. Morgan Stanley research indicates that power use from data warehouses is expected to triple globally from less than 15 terawatt-hours (TWh) in 2023 to 46 TWh this year alone as our world’s economy rapidly changes.
If not properly managed, this electricity demand could wreak havoc on our grid, causing blackouts and energy scarcities families and businesses just can’t afford. It’s critical that we shore up our energy supply and protect our grid from vulnerabilities now by investing in proven solutions like natural gas.
Energy experts and analysts alike have affirmed the role of natural gas to meet growing power demand. Goldman Sachs recently projected that natural gas will supply 60% of the load demand growth from AI and data centers. At the same time, energy research firm Rystad Energy has forecasted a need for “rapid growth” in natural gas supply to meet energy needs and also reach decarbonization goals.
This tracks with new data from the U.S. Energy Information Administration that shows natural gas has done more than any other fuel source to reduce carbon emissions in the power sector. Since 2005, 61% of carbon emission reductions were driven by natural gas fuel switching — much more than the emissions savings from zero-carbon generation — proving that natural gas is a tangible climate solution for right now.
With natural gas, we can also advance lower carbon solutions like clean hydrogen.
For example, the Appalachian Regional Clean Hydrogen Hub (ARCH2) is well positioned to lead in future energy solutions by developing “blue” hydrogen, or hydrogen produced through natural gas. To produce one kilogram of hydrogen, the electricity requirement for “green” hydrogen — which is produced with renewable energy — is more than double what is required for the “blue” pathway.
Producing hydrogen form natural gas is also considerably cheaper. According to one recent analysis, “blue” hydrogen is as much as 72% cheaper to produce than “green” hydrogen.
While natural gas is already widely used in the power sector and in homes and businesses, clean hydrogen is still in its infancy. To fully capture the benefits of affordable natural gas, the federal government needs to level the playing field. A new federal incentive for clean hydrogen production could be a game changer in kick-starting this industry, but draft rules issued late last year by the Biden administration prevents developers from using their actual emissions data in calculating the carbon intensity of “blue” hydrogen. Instead, they are forced to use an industry average that effectively locks out “blue” hydrogen from the full incentive.
If developers have invested in technology to reduce methane emissions and produce clean hydrogen, they shouldn’t be penalized. The fact that “blue” hydrogen is both cheaper and puts less strain on an already overtaxed grid means we need to encourage investment in this critical pathway.
Appalachia has long been a leader in delivering critical energy resources that power our world. The challenges we are facing with rising power demand are not easy, but with Appalachian natural gas, we have the strategic resources to meet those challenges head on, all while delivering a cleaner and cheaper energy future.
