US thermal power investment to surpass China's, driven by data center boom

The United States is poised to overtake China in thermal power generation investment this year, a significant shift driven by the insatiable energy demands of its burgeoning data center industry. Companies are increasingly opting to build their own gas-fired power plants rather than wait for grid connections, a trend that has dramatically boosted investment in fossil fuels.

According to analysis from Carbon Brief, citing the International Energy Agency's (IEA) "World Energy Investment 2026" report, new gas power plant investment decisions globally surged to 130 gigawatts in 2025. This marks a 25-year high and the second-highest level on record. The surge is largely fueled by the rapid growth of the U.S. artificial intelligence (AI) sector, which requires massive amounts of electricity.

Data centers in the U.S. represent the largest share of new gas power plant investment decisions globally, exceeding even regional classifications like the Middle East or Europe. The IEA forecasts U.S. electricity demand to grow by an average of 2% annually from 2026 to 2030, with data centers accounting for half of this projected increase. This escalating demand is straining existing power grids.

Consequently, major tech companies in the U.S. are increasingly investing in self-owned gas power generation. The IEA noted that this trend tripled U.S. fossil fuel investment last year and expects it to persist. Carbon Brief's analysis indicates that U.S. fossil fuel investment is set to skyrocket from $10 billion in 2024 to $50 billion this year, surpassing China's investments. China, historically the largest thermal power generator, is primarily reliant on coal and is currently transitioning to renewable energy sources.

The IEA estimates that global investment in power grids, generation facilities, and electricity production to support data center infrastructure will reach $105 billion this year. Carbon Brief highlighted that this figure alone surpasses the total energy sector investment for the entire African continent, where over 600 million people still lack access to electricity.