It’s a complicated time for gas: high costs and delays are derailing projects, and the fuel’s overall share on the power grid continues to decrease. But there has also been a frenzy of gas-powered data center announcements in the last year, as hyperscalers seek fast access to power. And the gas industry has jumped on that new load, announcing billions of dollars of pipeline expansions and power plant conversions around the country.

California’s largest utility, PG&E, is also exploring that trend, looking to leverage excess capacity on its fossil gas transmission grid. But exactly what those agreements will look like is something the utility is still ironing out, said VP of gas engineering Austin Hastings. 

Providing onsite gas power for data centers may be trickier for PG&E than for midstream gas companies like Enbridge and Energy Transfer. The utility, which has committed to reach net zero emissions by 2040, has been gradually winding down its gas distribution system for several years, in line with California’s phase-out of fossil gas for residential purposes. 

But winding down the gas transmission system, which is one of the largest in the country, hasn’t been part of the plan. Gas remains a critical resiliency resource for PG&E, and still accounts for more than half of generation on peak days, Hastings explained. Longer-term, the utility is looking to blend cleaner fuels like green hydrogen into that system, as part of its pathway to net zero.

Just this week, PG&E said it plans to spend $73 billion by 2030 on upgrading its transmission system in light of load growth. The utility is fielding around 10 gigawatts of new demand in its territory, largely from hyperscale data centers who want to get power as quickly as possible. 

The utility’s longer-term plans to reach net zero haven’t changed, Hastings said — but there’s a growing understanding inside PG&E that leveraging the excess transmission capacity on its network of nearly 7,000 miles of high capacity pipelines may be essential to attracting data center load in the immediate term.

Today, a hyperscaler could theoretically get power to a site along a major pipeline in 18 to 24 months, without needing any additional upstream infrastructure investments, Hastings explained. (That’s assuming, of course, that the hyperscaler can get its hands on the turbines needed both to generate power and to run compressor stations.)

There aren’t any data centers tapping in directly to that transmission system yet, Hastings said, but PG&E’s gas business is in active conversations with developers who want to build power plants along the utility’s major pipelines. Despite the many slowdowns and expenses facing fossil gas at the moment, that path is still significantly faster than the five-year wait time in California’s electric grid interconnection queue.

The shifting transmission map

PG&E’s massive gas transmission structure is partly the result of an imbalance in the state’s energy use. While gas accounted for around 35% of total electricity generation in California last year according to the Energy Information Administration, that amount comes out to less than 10% of the state’s total fossil gas consumption. 

The utility manages two “backbone” pipelines: One, which PG&E takes ownership of at the Arizona border, brings gas into California from the Permian basin. The other, which comes in through the California-Oregon border, brings gas from the Canadian basins.

California also has significant underground storage, which Hastings compares to batteries on the electric grid. “We have the ability to store essentially 40 days worth of gas underground in our service territory,” he explained. “That allows us to withdraw gas during times of peak demand.”

It’s not yet entirely clear how the trend of connecting data centers directly to gas transmission lines will play out, Hastings said. For one thing, at least in the early stages of conversations, data center developers themselves don’t seem to have decided whether they should be looking to gas as backup or primary power.

“They don’t necessarily want to commit to one or the other, they want to be able to pursue both options,” he explained. “A developer may keep it close to their chest, what it is they’re intending to do, but they’re certainly using natural gas as an opportunity against speed to market so that they can get their electric generation before they can get an interconnection.”

It’s a framework that may work for now, while there’s available capacity on the gas transmission grid. But Hastings anticipates the system will soon be facing constraints: PG&E is currently fielding requests equal to hundreds of millions of cubic feet of fossil gas a day, which would represent significant new demand, and the need to build new transmission infrastructure — a complete reversal from plans for the system just a few years ago.

“We want to make sure that we can still provide that adequate supply…but we also have to be cautious and not overbuild,” Hastings said. “We need to ensure we have long-term commitments in the amount of gas load that’s going to be consumed by [data centers] because you don’t want to be investing hundreds of millions of dollars just for peak time.”

As for the additional emissions on PG&E’s system that would be produced by gas-powered data centers, Hastings isn’t concerned that these potential deals would put the utility’s 2040 goals out of reach. Additional emissions on the transmission side are easier for the utility to mitigate via carbon capture and sequestration than on the distribution side, he explained.

“We know that we’re trying to be net zero, but we’re never going to get our emissions down to zero,” Hastings said. “It’s obviously much easier to capture the carbon and sequester it when it comes out of a power plant or a refinery or large customers using a lot of natural gas…than it is at the individual customer base on the residential side.”

A version of this story was published in the AI-Energy Nexus newsletter on October 1. Subscribe to get pieces like this — plus expert analysis, original reporting, and curated resources — in your inbox every Wednesday.

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