60 GW of Gas, 90 GW Behind the Meter: Report Says Batteries Should Come First

U.S. utilities are planning more than 60 gigawatts of new gas plants to serve data center demand, and developers have proposed roughly 90 GW of behind-the-meter gas generators nationwide. A new report from researchers at Georgetown and Duke universities argues that batteries — cheaper, modular and faster to deploy — should be the first choice for meeting that load instead.

The report, released last week, lays out ways states can push utilities and tech firms toward energy storage over fossil fuels whenever possible. It lands amid mounting fears that the AI sector is a bubble about to pop, and amid warnings that overbuilt gas could leave other utility customers holding the bill.

Why the report flags 'stranded asset' risk

Fossil generation — whether utility-scale plants or generators installed behind the meter at data centers — has become the default for much of the AI industry because gas offers round-the-clock power in a single package. That convenience carries a price.

If data center proposals fall through or shut down early, other utility customers could pay for overbuilt gas. The report calls this stranded-asset risk, and states have only begun to tackle it. Batteries, the authors write, "can act as a hedge against that risk."

Batteries cost much less than round-the-clock gas generation in situations where hours of stored energy can solve near-term needs. Their modularity lets planners scale deployment up or down if data center demand shifts sharply — something gas power plants do not allow. Batteries can also avoid costly grid buildouts that would otherwise serve rising electricity demand, and can cushion the grid against data centers' massive, fast-changing computing loads.

What does this change for data center power planning?

Lithium-ion batteries cannot provide round-the-clock power, but they can meet large portions of data center electricity needs, said Jackson Ewing, director of energy and climate policy at Duke University's Nicholas Institute of Energy, Environment & Sustainability. And unlike advanced geothermal, next-generation nuclear and novel long-duration storage technologies, "batteries are already showing serious momentum in terms of their deployment trajectory."

The market is moving in that direction even as gas plans advance. A new BloombergNEF forecast sees U.S. energy storage deployment surpassing 11,000 gigawatt-hours by 2036 — a 30% increase from the 10-year forecast the firm issued just six months ago. Data center demand is driving much of that growth.

"At the moment, there's a lot of inertia and status quo pressure for much of the behind-the-meter resources being natural gas," said Ian Hitchcock, report co-author and senior program coordinator at the Duke Initiative for Science and Society.

Which policy levers do states hold?

For states that directly regulate utility investments, the report recommends "bring your own new clean energy" tariff structures. These set minimum requirements for data centers to procure or pay for enough carbon-free generation and storage to cover some or all of their electricity needs. Some jurisdictions are already moving: Google has signed onto such tariffs with regulators in Nevada and Minnesota.

Restructured energy markets complicate the picture. In those states, regulators hold limited authority over the independent power producers that build large generation and battery projects and sell into wholesale markets. Even so, the report highlights options:

• State energy storage mandates, like those launched in Illinois, Maryland and New Jersey
• State energy planning conducted in conjunction with regional grid operators

"There is not a jurisdiction that has no potential action items if they're serious about trying to deploy this," Hitchcock said.

The milestone to watch now is whether states adopt the tariff structures and storage mandates the report prescribes — and whether the 90 GW of proposed behind-the-meter gas gets built before regulators act.