Rapid growth in artificial intelligence investment is prompting data center projects in the United States to move beyond relying solely on grid power and build their own generation infrastructure. The 59 projects in the country plan a total of 90 gigawatts of generation capacity to meet their electricity needs directly.
This amount represents more than one-quarter of the total data center capacity planned in the United States. Some 82 gigawatts, accounting for approximately 92 percent of the planned capacity, has been announced since the beginning of 2025.
On-site power plants are being built instead of waiting for grid connections
Connecting large-scale data centers to the electricity grid can take up to seven years for some projects. Investors are therefore seeking to bring the facilities online sooner by building generation capacity next to the data centers rather than waiting for grid investments to be completed.
The need for large amounts of electricity around the clock at data centers running artificial intelligence applications is reinforcing this trend. Alongside Meta, Microsoft, Amazon and Oracle, OpenAI and Anthropic are also involved in on-site power generation projects. OpenAI and Anthropic are said to have signed lease agreements for a combined capacity of more than 10 gigawatts in this area.
Technologies that can be deployed quickly are preferred
Projects are favoring technologies that can be installed more quickly than conventional power plants. These options include mobile natural gas generators, aeroderivative turbines used in aircraft and warships, reciprocating engines that can be brought online quickly, and refurbished turbines previously used at industrial facilities.
The priority in these investments is bringing the facility into operation quickly rather than maximizing power generation efficiency. Artificial intelligence data centers are said to be capable of generating $10 million to $12 million in annual revenue per megawatt. As a result, bringing a data center into operation several years early can generate billions of dollars in additional revenue.
Texas leads capacity plans while Ohio leads construction
Data center capacity based on on-site power generation is concentrated in certain U.S. states. Five states account for 83 percent of the total planned capacity.
Texas is by far the leader in planned capacity, thanks to its proximity to natural gas resources in the Permian Basin, extensive pipeline infrastructure and regulatory framework that allows data center investments to advance quickly. Ohio, meanwhile, leads the country in on-site capacity under construction. A total of 736 megawatts of natural gas-based generation capacity is expected to be added to projects by Meta and EdgeConneX in the state.
Most of the 90 GW plan has yet to materialize
Only about 2 gigawatts of the planned 90 gigawatts of capacity is currently operational. This represents 2.2 percent of the total capacity. While 1.2 percent of the capacity is under construction and 36 percent is in the permitting stage, approximately 60 percent remains at the announcement or early development stage.
Most of the approximately 2 gigawatts of operational on-site capacity consists of generation facilities serving Colossus 1 and Colossus 2, the data centers of Elon Musk’s artificial intelligence company xAI outside Memphis. The two facilities operate a combined 1,498 megawatts of natural gas turbine capacity.
Operational on-site capacity is expected to reach between 2.8 and 3.2 gigawatts by the end of 2026. If all projects with signed tenant agreements are completed on time, total capacity could reach 13 gigawatts by the end of 2027.
Permits and fuel supplies complicate project timelines
Projects building their own power plants instead of waiting for grid connections also face environmental and other permitting processes. The schedule for OpenAI and Oracle’s Stargate project in New Mexico has been affected after the state blocked the natural gas pipeline intended to supply fuel to the facility’s 2.45-gigawatt power plant.
Problems have also arisen in the process of obtaining an air emissions permit for the 400-megawatt on-site natural gas power plant in New Jersey operated by Microsoft partner Nebius. If such delays become widespread, the total on-site capacity expected by the end of 2027 could fall to as low as 5 gigawatts.
Data center investments now depend not only on access to grid connections but also on access to generation equipment, fuel supplies and permitting processes. The growth of artificial intelligence investment is making these factors decisive in determining when facilities will begin operations.
