Trump pushes gas to fuel AI boom, but building factories takes years

(Bloomberg)– When the Trump administration called Friday for an emergency electricity auction as part of an ambitious attempt to speed construction of large power plants and rein in skyrocketing electricity bills, top officials made clear that the vision encompassed specific types of energy: coal, gas and nuclear.

“We need to build basic power plants to keep the lights on, to keep our homes warm and to fuel our economy,” U.S. Interior Secretary Doug Burgum said Friday at an event just steps from the White House. Baseline generation includes coal, natural gas and nuclear, according to an administration fact sheet on the plan. It notably excludes renewable energies.

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But building the type of power plants the Trump administration favors has become extremely difficult. No one has built a coal-fired power plant in the United States in more than a decade. And no developers have released large-scale nuclear plans after the last new reactor went billions of dollars over budget and was several years behind schedule.

Gas plants have their own challenges. The lead times for commissioning a US gas plant are increasing, with average lead times increasing from 3.5 years to 5 years between 2023 and 2025, according to BloombergNEF. The cost of building a combined cycle gas plant, the most efficient type, has increased by about 49% over the same period.

“The main limitations are the market for turbines and the people who build them,” said Nicholas Amicucci, an analyst at Evercore. “Site selection and permitting is a real mess.”

The massive increase in energy consumption of data centers, new factories and the overall electrification of the economy has led to a concomitant increase in demand for turbines that produce electricity by burning natural gas. This has led to a rush among technology companies, utilities and developers, all competing to obtain a limited number of gas turbines. Turbine maker GE Vernova said its turbines would run out until 2028 and it was now taking orders for 2029.

Burgum and Energy Secretary Chris Wright, who serves as chairman and vice chairman of President Donald Trump’s National Energy Leadership Council, joined Republican and Democratic governors from 13 states on Friday to issue a “statement of principles” urging America’s largest grid operator, PJM Interconnection LLC, to hold an emergency wholesale electricity auction later this year.

The auction would allow tech companies building huge data centers to bid on 15-year contracts for new power generation. An auction could fund $15 billion worth of new plants, which would add up to 7.5 gigawatts of capacity, according to a Jefferies report. One gigawatt is roughly equivalent to the output of a traditional nuclear reactor.

Comments from administration officials and outgoing Virginia Gov. Glenn Youngkin on Friday highlighted a central conflict in the U.S. energy sector. It’s widely acknowledged that the U.S. power grid needs all the electrons it can get, but many Democratic leaders have opposed building new fossil fuel infrastructure and many Republicans have criticized subsidies encouraging new solar and wind farms.

Rob Gramlich, president of Grid Strategies and former senior economist at PJM, said the auction should also include clean energy. He said sources such as offshore wind and batteries have the same capacity value as gas plants and noted that no energy source is available every second of the year. “The market should include all resources with the credit they deserve,” he said.

Back at the White House on Friday, Youngkin and Trump’s cabinet secretaries largely rejected the renewable energy option. “Renewables won’t do it,” Youngkin said. “We need gas plants. We need nuclear. We need everything. We need it now.”

–With help from Jennifer A Dlouhy, Naureen S Malik, Akshat Rathi and Will Wade.

(Updates with Jefferies estimate in 8th paragraph.)

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