Reliability Decides the Data Center Energy Mix

Published November 9, 2026

America’s data center buildout has become one of the largest new sources of electricity demand in the country. BloombergNEF’s base case has installed US data-center capacity rising from 47 gigawatts in 2025 to 194GW in 2035, roughly a fourfold increase in ten years. That demand is helping lift clean power to new highs, with BNEF forecasting 89GW of solar, wind and storage additions in 2026 and 93GW in 2027, two consecutive record years.

The same demand is also creating an opening for natural gas. Data centers are expected to run every hour of every year, and the resources that can meet that standard quickly and at low cost have an advantage. As a result, reliability, more than the cost of an individual megawatt-hour, is increasingly shaping which technologies serve this new load.

Why Data Centers Need Power Around the Clock

Data centers already account for a meaningful share of US electricity use, and that share is growing. A Department of Energy-backed report by Lawrence Berkeley National Laboratory found that data centers consumed about 4.4% of US electricity in 2023, a share expected to reach 6.7% to 12% by 2028. Their total use rose from 58 terawatt-hours in 2014 to 176TWh in 2023, and is projected at 325 to 580TWh by 2028.

What sets this load apart is its reliability requirement. In its cost comparison, BNEF modeled a 1GW data center in the PJM market with generation sized to meet hourly demand at 99.999% reliability, which leaves room for only about five minutes of unserved demand per year. The model assumes 95% utilization and a power usage effectiveness of 1.25, meaning the facility draws 25% more power than its IT equipment alone.

In practice, that standard places three demands on any power source:

Continuous output, regardless of weather, season or time of day
Fast time-to-power, since developers want new capacity online in a few years, not a decade
The ability to handle sudden swings in demand as AI workloads ramp up and down

Each technology meets these demands differently, and that is where the competition begins.

Why On-Site Gas Leads on Cost and Speed

BNEF’s analysis finds that on-site natural gas currently has an edge in both speed and cost when the goal is round-the-clock reliability. The firm has tracked 165GW of announced on-site gas generation projects at US data centers, and it says gas could meet a sizable share of rising data-center demand, potentially reducing the near-term role of renewables.

The comparison with other options comes down to how each one reaches 99.999% reliability:

On-site gas: dispatchable on demand and comparatively fast to build, which gives it the lowest modeled all-in cost today
Renewables plus storage: must be significantly oversized to cover nights, calm days and seasonal lows, which raises upfront spending
Clean firm power such as nuclear and small modular reactors: reliable output, but much longer development timelines

The gas pipeline also carries real uncertainty. BNEF notes that many announced projects are missing a proposed in-service date or an identified equipment supplier. Equipment is a growing constraint: Wood Mackenzie reported that global gas turbine orders reached 110GW at the end of 2025, against manufacturing capacity of only 60 to 70GW a year. It expects turbine prices to reach about $600 per kilowatt by the end of 2027, a 195% increase since 2019, with lead times of up to six years. Those pressures could narrow the speed advantage that makes gas attractive in the first place.

Storage Is Becoming Part of Every Option

Energy storage may be the clearest winner from the reliability debate, because it is needed whichever generation path data centers choose. BNEF now expects 383GW of US energy storage additions from 2026 to 2036, up 34% from its May 2026 outlook. That is the largest upward revision of any technology in its latest forecast, compared with a 15% increase for onshore wind and a 7.5% cut for utility-scale solar.

Storage plays a different role depending on the power source it supports:

With renewables, batteries shift solar and wind output into hours when generation falls short, reducing how much extra capacity must be built
With on-site gas, BNEF says many plants will need batteries for redundancy, better efficiency and protection from rapid swings in AI-driven demand
With the grid, storage can help a data center reduce its draw during peak periods, easing pressure on local networks

Data centers are already influencing the storage market directly. In a separate outlook, BNEF said US deployment is being supported by preserved tax credits and accelerated by demand for on-site storage at data centers. Globally, BNEF expects a record 188GW of storage additions in 2026, a 45% increase on the previous year. For data center developers, the question is increasingly not whether to install batteries, but how much and in what configuration.

Conclusion: What Could Shift the Balance

For now, the need for uninterrupted power gives on-site gas a cost and speed advantage at many new data centers, while clean power continues to grow at record pace across the wider grid. BNEF is clear that this balance is not fixed. Tighter emissions rules, restrictions on new gas permitting or a higher carbon price could weaken gas economics and move more data-center demand toward clean technologies. Corporate clean energy buyers, state procurement programs and decarbonization targets push in the same direction, while higher financing costs, equipment tariffs and regulatory uncertainty work against faster clean deployment.

Supply chains add another variable. Turbine shortages could slow gas projects, while cheaper storage and continued renewable build could make clean, firm configurations more competitive over time.

For companies that rely on cloud and AI services, these choices are not abstract. The power mix behind a data center feeds into the emissions profile of the services built on it, and ultimately into customers’ own Scope 2 and Scope 3 reporting. Tracking where and when that electricity is generated will matter more as data center demand grows.