AI boom means US is now ‘investing more’ in fossil-fuel power than China

The “data-centre boom” is driving a surge in gas investment in the US, pushing its fossil-power spending ahead of China, according to the International Energy Agency (IEA).

A rapid expansion of data centres across the nation is at the heart of the US tech sector’s plans to continue “dominat[ing]” the global artificial intelligence (AI) industry.

High demand for electricity to power these data centres has led to companies rushing to build new gas-fired power plants across the country.

This trend, combined with “soaring” gas-turbine prices, drove a threefold increase in US gas‑power investment in 2025 – and the IEA expects this to continue throughout 2026.

As the chart below shows, Chinese investment in coal- and gas-fired power is expected to drop this year, amid domestic policy changes and the Iran war sending gas prices spiralling.

Together, these trends mean the IEA expects US investment in fossil-fuelled power plants to overtake China’s in 2026.

The IEA’s latest world energy investment report shows that spending on renewables and electricity grids continues to dominate at the global scale.

In the US, Trump administration policies such as the phase-out of tax credits for renewables has led to the IEA revising its forecast for new wind and solar power downwards.

At the same time, US electricity demand is expected to rise by an average of 2% per year from 2026 to 2030, with data centres contributing half of the overall increase.

This is leading to what the IEA calls an “AI-driven push” to build new gas-power plants in the US, the world’s largest data-centre market and largest gas producer.

Globally, orders for new gas-power plants increased to 130 gigawatts (GW) in 2025 – a 25-year high – and US demand was a “major factor” in this, according to the IEA.

Much of the demand is coming from tech companies in the US seeking to bypass grid connection queues by building “captive” gas-power plants.

As the chart below shows, since the start of 2025 these US captive data centres alone have signed off on more investment in new gas turbines than any country in the world – aside from the US itself.

Overall, investment in grid upgrades, power equipment and electricity generation to support the buildout of data-centre infrastructure around the world hit $105bn in 2025, according to the IEA.

This is more than the total invested in the energy sector across the whole of Africa – a continent where more than 600 million people do not have access to electricity.

The IEA notes that strong demand for gas-power plants for data centres in the US – and, to a lesser extent, the Middle East – is “limiting the availability of turbines for near-term deployment elsewhere in the world”.

The agency also points out that as the tech sector becomes a “major energy investor”, accounting for around 40% of all corporate power-purchase agreements, it is also “underpinning momentum” for emerging clean technologies, such as small modular nuclear reactors and advanced geothermal.

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