Tech giants teach energy giants: How to supply AI-powered electricity

Hunter Energy CEO Hunter Hunter.

Last week, officials who strongly support energy dominance in the Trump administration gathered in Houston to celebrate how U.S. natural gas is helping America stay ahead in the AI race. But tech industry figures from the West Coast say relying solely on natural gas to maintain the lead is risky.

This event was the CERAWeek Energy Conference hosted by S&P Global—the world’s largest and most influential energy leadership summit. Cabinet ministers and CEOs of oil and gas producers, utilities, and pipeline operators repeatedly emphasized that cheap natural gas and America’s distance from the war-torn Middle East make the U.S. an ideal landing spot for large AI projects.

But the Silicon Valley giants willing to fund these AI projects prefer to diversify risks through renewable energy, batteries, and nuclear power. Even ignoring climate issues, some worry that by the time new gas-fired power plants come online, natural gas prices may have already risen, increasing consumer electricity bills and triggering political backlash against AI.

I have attended CERAWeek for many years, and this year’s significance is extraordinary—because the flow of capital is no longer dominated by energy giants but by tech giants. In Houston, the energy capital, Microsoft, Google, and data center developers like Crusoe are frequently sponsoring forums and hosting dinners, just like Chevron. (In fact, Crusoe and Microsoft finalized an agreement last Friday to build a data center in Abilene, Texas.)

Energy and tech executives have reached unprecedented consensus on the necessity of critical infrastructure, but their ideas sometimes clash. Toby Neugebohr plans to build a super-large data center in Amarillo, Texas, and has clashed with Google’s global energy chief Amanda Peterson Corio over the sources of energy needed for AI.

Neugebohr told the audience, “There are only two options for the scale of electricity companies like Google need”: natural gas or nuclear power. Corio opposed this.

“Even if we start building nuclear now, it won’t be operational for ten years because we haven’t invested in talent, supply chains, and all necessary links,” she said plainly. “And relying solely on natural gas would also put us in trouble,” because supply chain bottlenecks exist in the natural gas sector as well.

Corio said that Google’s planned energy mix for a data center in Minnesota—including wind, solar, and a new 100-hour battery storage system—will be implemented much faster. “We need to change our mindset,” she emphasized. To be fair, Google also plans to use some natural gas and supports nuclear power, including restarting a shut-down reactor in Iowa, developing new small modular reactors, and even nuclear fusion. But she’s right: large-scale new nuclear power plants still require years to come online.

Microsoft’s Vice President of Energy, Bobby Hollis, told a packed audience that while many believe tech companies only value renewable energy, Microsoft intends to adopt a diversified energy mix, including nuclear, hydropower, and carbon removal technologies. The company also admits, “Fossil fuels will still be part of our energy mix for a long time.” In another interview, he told me that grid modernization is equally urgent. Simple upgrades like reinforcing power poles and enhancing storm resistance “often don’t attract as much attention as building new power plants,” but their importance remains undiminished.

Data center developers currently see natural gas as quick to build, but are also exploring new options. Daryl Willis from Microsoft leads a team helping clients like Aalo Atomics reduce the time-consuming paperwork involved in licensing using AI. He told me, “Technology can really help us reimagine the energy landscape.”

Over-reliance on natural gas in the future could backfire.

The U.S. natural gas market is largely isolated from the global market, with domestic prices far lower than what consumers in Europe and Asia pay. The reason is that these countries lack their own natural gas supplies and must import liquefied natural gas (LNG) at high prices via tankers across oceans.

As the U.S. engages in conflict with Iran, uncertainties around natural gas supplies have surged. Iran’s attacks damaged export facilities, which may take years to restore. Currently, U.S. LNG exports are near capacity, but exporters plan to more than double liquefaction capacity by 2029. This could lead to global buyers competing with domestic users for gas, pushing prices higher.

While producers can increase output to curb price hikes, these shifts could alter the profitability models of data centers dependent on natural gas.

AI companies plan to use 75% of the electricity generated in their self-built power plants for natural gas combustion. The U.S. government is also promoting increased natural gas use. Just before CERAWeek, allies like Japan announced they would respond to Trump’s call by building the largest gas-fired power plants in AI computing history.

Tech companies also need contingency plans in case Democrats regain control of the White House or various power and natural gas infrastructure face administrative approval delays.

More and more oil and gas industry figures are calling for energy diversification. Hunter Hunter, CEO of Hunter Energy, comes from a family of oil industry veterans and has invested in grid transmission, batteries, and new solar technologies. At the final roundtable of CERAWeek, he said the U.S. is overly embroiled in partisan political disputes. “We argue about everything,” he said. “Increasing energy supply through renewables and new technologies is the true embodiment of a ‘wartime’ mentality.”