Hyperscalers may regret their natural gas bet as prices could triple
After years of pouring money into wind and solar projects, hyperscalers such as Amazon, Google, Meta, and Microsoft are increasingly turning to natural gas to power the data centers behind their ambitious artificial intelligence initiatives. But a fresh research report warns that their newfound reliance on fossil fuels could come back to haunt them.
According to Noreva, an energy research firm, natural gas prices could triple in parts of the United States over the coming years. The projected surge stems from a confluence of factors: soaring demand from hyperscalers, stagnating supply growth, and rising exports of liquefied natural gas. The report suggests that cloud giants may be ill-prepared for the price shocks that lie ahead.
"I think everyone in the energy markets has been lulled into a sense that gas prices can't go up," Peter Gardett, CEO of Noreva, told TechCrunch. "You just need simple arithmetic to get to a much tighter gas market than you were in just a few years ago."
Cheap gas has encouraged hyperscalers to lock in supply. In March, Meta announced plans to build a massive 7.5-gigawatt natural gas power plant in Louisiana to support its Hyperion data center. Days later, Microsoft and Google each said they would construct their own gigawatt-scale gas plants, both in Texas. Amazon followed suit with a proposal for a 7.6-gigawatt gas facility, also in Texas.
For companies that have traditionally steered clear of heavy capital expenditures, the data center construction boom has suddenly pushed them into major investments in physical infrastructure — and deeper into energy markets, a domain with which they have little familiarity. Gardett noted that at least one investor he spoke with was "surprised" by the scale of these commitments.
The timing of these bets is particularly concerning, according to the research. While hyperscalers have signed long-term deals to secure gas supply, the market dynamics that made gas cheap and abundant just a few years ago are shifting. Domestic production growth is slowing, while international demand for American LNG continues to climb, creating a structural squeeze that could leave domestic buyers competing with export markets for limited supply.
If the Noreva forecast proves accurate, the financial impact on hyperscalers could be substantial. Power is already one of the largest operating costs for data centers, and a tripling of gas prices would ripple through the economics of AI infrastructure, potentially forcing companies to raise prices for cloud services or absorb thinner margins.
The report's authors argue that hyperscalers should have hedged their bets more carefully, diversifying their energy portfolios rather than concentrating on a single fuel source. While natural gas has been a reliable bridge fuel, its price volatility — now amplified by AI-driven demand — makes it a riskier foundation for long-term infrastructure planning than many in the industry appear to believe.
