Pennsylvania carves out space in data center race
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Pennsylvania is "quickly emerging" as a major hub for gas-powered data centers, per a new analysis by research firm BloombergNEF.
Why it matters: Policy incentives, billions in private investment and Pennsylvania's vast natural gas reserves are expected to supercharge the state's capacity as developers race to lock down new power sources for soaring AI-driven computing demand.
The big picture: U.S. power demand from data centers is projected to reach 106 gigawatts by 2035 — a 36% jump from the firm's April forecast and nearly triple today's demand, "illustrating just how quickly the sector is expanding," per the report.
Context: A gigawatt is enough to power roughly 750,000 to 1 million homes.
Zoom in: Pennsylvania added 2.4 gigawatts of new data center capacity from March 2024 to March 2025, per the report.
- The analysis points to the $10 billion plan to convert the Homer City Generating Station into a 4.5-gigawatt gas plant by 2027 — already courting data center clients — and TECfusion's 3-gigawatt facility set to open in Upper Burrell in the coming months as signs of the state's accelerating role in the data-center boom.
Friction point: The surge in proposed data centers in Pennsylvania is fueling concerns about rising energy costs, power grid strain, greater dependence on natural gas, consumer protection and impacts on housing prices.
- State and national leaders are banking on AI to help drive economic growth and position the state as a tech leader.
- But in places like Springdale, residents are pushing back — arguing that the proposals lack adequate regulatory guardrails and objecting to possible noise and pollution.
Zoom out: Data centers are driving more than demand for the state's natural gas. Amazon in June announced plans to spend $20 billion on two data center campuses in Bucks and Luzerne counties, including one alongside a nuclear power plant.
- Microsoft cut a deal last year to fire up Pennsylvania's dormant Three Mile Island nuclear plant to power its data centers — an effort that recently nabbed a $1 billion loan from the Trump administration.
State of play: PJM Interconnection — the nation's largest power grid operator spanning Pennsylvania and 12 other states — is the country's data center capital, accounting for nearly half of all projected capacity.
- Virginia and Ohio dominate the sector, but Pennsylvania and Illinois are rising fast, per the report.
Between the lines: Before 2020, most U.S. data centers were small — under 5 megawatts — and clustered in cities.
- As facilities grow larger and more power-hungry amid the AI boom, developers have pushed into suburban areas within 30 miles of major metros to build hyperscale campuses.
What we're watching: PJM warns it could face a power supply crunch by decade's end, as a surge in new data centers drives up electricity demand.
- "These pressures point to an inflection moment for U.S. grids: the desire to accommodate AI-driven load without undermining reliability or driving up power costs," BloombergNEF said in the report's summary.