Why Tech Giants Are Ditching the Power Grid

It is the industrial version of what homeowners might do to get through a hurricane. Only in this case, some technology companies are planning to rely on off-grid gas power for many years.

This is happening as electricity is becoming a major political issue, with fights breaking out over how much energy costs, where it comes from and who ought to pay for what. Data centers, which consume huge amounts of energy, are at the center of these debates.

Going off grid was no one’s first choice. Off-grid power generally costs a lot more, partly because developers need to install more equipment than will be used at any one time in case machines break or need servicing. A lot of this gear is also less efficient than the airplane-size machines used at big power plants, meaning it needs to burn more gas to generate the same amount of electricity.

But in some states, it might take years to get permission to plug new power plants into the grid.

By the end of 2025, an estimated 39 percent of the gas power capacity being developed in the United States was designed to serve data centers on-site, according to the Global Energy Monitor, a nonprofit organization that tracks energy projects. That is up from 5 percent at the end of 2024.

“Necessity is the mother of invention,” said Joe Kava, a consultant who previously led global data center development for Google. “The hyperscalers are not going to be curtailed because they can’t get power,” he said, using a term that refers to large tech companies.

Power plants have bloomed in New Albany, Ohio, near Columbus, as if overnight. It was little more than a year ago that Sloan Spalding, the mayor, learned that a data center developer wanted to build the town’s first gas-fired power plant. Now, three are under construction, all meant to exclusively power data centers, and at least one other is planned.

“Frankly, we were all a little surprised,” Mr. Spalding said.

Together, the plants that are already under construction are expected to rely on about 61 engines, 30 small turbines and 16 other generators, regulatory filings show. All of that equipment burns natural gas to generate electricity, but each operates differently. That does not include battery storage systems to manage demand fluctuations and diesel generators for backup power in emergencies.

It is the kind of equipment you might expect in remote oil fields. Were they connected to the grid, the machines being installed in New Albany could potentially power around 600,000 homes. Another power plant that was proposed last week would be big enough to provide electricity for an additional 200,000 homes or more if regulators approve it.

“For better or for worse, we are the pioneers in this process,” Mr. Spalding said. “There’s not a lot we can do to stop it.”

Tech giants generally say they don’t want to build or operate power plants. In some places, the companies are fighting efforts to require data centers to rely on their own power sources or reduce energy consumption when electricity systems are under strain.

But the tech industry’s appetite for energy has become almost insatiable because of artificial intelligence, and there are only so many places where companies can draw large amounts of power from the grid quickly. Wait times vary by region, but it now takes an average of four years or more for data centers to connect to U.S. grids, according to JLL, a real estate services firm.

One of the first companies to go it alone was Elon Musk’s xAI, which opened a data center in Memphis in 2024, powering it with more than a dozen gas turbines rolled in on flatbed trucks. The Southern Environmental Law Center later claimed the company flouted permitting requirements and violated the federal Clean Air Act in Memphis and at another location in Southaven, Miss. xAI, which eventually received permits for some turbines in Memphis and stopped using others, did not respond to requests for comment.

By that point, tech companies were flocking to Ohio, so much so that the main electric utility serving the Columbus area stopped accepting data center applications for new grid connections in March 2023. The state quickly became one of the first battlegrounds between utilities and some of the world’s most valuable companies.

It was against that backdrop that some developers started going off-grid in New Albany, which is near the western edge of a large natural gas deposit.

EdgeConneX, a Washington-area data center developer that did not respond to requests for comment, is behind one of the power plants. Williams Companies, an Oklahoma pipeline operator, is building at least two for Meta, Facebook’s parent company.

Meta has agreed to buy the power that Williams generates for at least a decade, said Chad Zamarin, Williams’s chief executive.

“Whether they use it or not, we will get paid,” Mr. Zamarin said.

The power deal is among the most expensive that Paul Zimbardo, an analyst at the investment firm Jefferies, said he had come across. Meta may have agreed to pay Williams $140 to $160 per megawatt-hour, the investment bank estimated, well above the price of grid power.

Last week, Williams told regulators that it wanted to build a third power plant in New Albany for an undisclosed customer.

These plants will not affect the price of electricity for Ohio residents because the facilities are not connected to the grid, though higher gas demand could drive up fuel prices over time.

Meta said the local utility’s pause on serving new data centers, which ended last year, influenced its decision to go off grid. The company, which has pledged to fully offset its greenhouse-gas emissions by 2030, is buying renewable energy to compensate for the electricity it gets from fossil fuels, said Ryan Daniels, a company spokesman.

Companies are gravitating to gas because it can theoretically generate electricity all day, unlike the wind or sun. And smaller gas generators and engines can be installed much faster than nuclear power plants.

That worries Noah Malik, who lives several miles from New Albany’s new plants. “By building this infrastructure, you’ve cemented that dependence on fossil fuels,” said Mr. Malik, who is 25.

Most of the off-grid power plants being planned around the country are either under construction or about to be, meaning the full environmental effects have yet to be felt.

New Albany’s new power plants are expected to release more nitrogen oxides — a group of pollutants linked to respiratory diseases like asthma — for each unit of electricity they produce than the larger gas plants that power most of Ohio, according to an analysis of regulatory filings and manufacturer data by the Environmental Defense Fund. That analysis, performed for The New York Times, accounts for the emissions controls that the developers have said they would install.

“I do worry about the near-term impacts of this choice on air quality and communities today,” said Mark Brownstein, a senior vice president at the Environmental Defense Fund. “Why exactly are we rushing?” he added. “There is a concern that haste is making waste here.”

A Williams spokesman said the company would “meet and exceed all state-established requirements to protect public health and the environment.” A spokesman for the Ohio Environmental Protection Agency said it modeled air quality to assess the facilities’ cumulative impact and ensure compliance with federal standards before giving developers permission to build the plants.

Noise levels must remain within five decibels of ambient levels, said a spokesman for the Ohio Power Siting Board, which also reviews major energy projects.

A big question is how long this gas power frenzy will last. Manufacturers of gas turbines and related equipment have been wrestling with how much money to invest in new manufacturing lines. Their big concern is that, by the time the new capacity is ready, demand for the equipment might have weakened significantly.

Baker Hughes, an oil field service company that makes the kinds of turbines being used off grid, is betting on strong data center demand for at least several years. It is one of many oil and gas companies that have piled into the power business as oil field work has slowed.

“We don’t see this being a fad,” said Lorenzo Simonelli, the company’s chief executive.

Industry analysts and executives also question whether power plants built alongside data centers will remain competitive if it becomes easier to connect to the grid.

Siemens Energy makes some of the equipment that the New Albany power plants plan to use. But even that company’s chief executive, Christian Bruch, is skeptical about using smaller machines as permanent power sources.

“These will not be long-term installations,” Mr. Bruch said in a recent interview, discussing the broader trend. “Is it good in terms of efficiency? And is that a smart power supply solution? Absolutely not.”