Anthropic is betting billions on natural gas generators

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• Anthropic is spending $3.4 billion to secure its own electricity supply

• Caterpillar equipment will give Anthropic access to 1.7 gigawatts of power

• America’s electricity shortage is forcing AI companies to rethink infrastructure investments

Anthropic is spending $3.4 billion on natural gas generators as electricity shortages threaten the expansion of artificial intelligence infrastructure across the United States.

According to a Financial Times report, the company is purchasing Caterpillar equipment capable of generating up to 1.7 gigawatts of electricity.

The acquisition marks a departure from Anthropic’s previous preference for renting computing infrastructure, as securing sufficient electricity becomes increasingly difficult.

Anthropic invests in electricity generation as AI demand grows

The generators could supply substantial electricity for data center operations supporting Claude, Anthropic’s artificial intelligence platform, and competing services.

Technology companies now face growing difficulties in securing enough electricity to operate increasingly demanding AI computing infrastructure.

Data centers require substantial power to operate processors, cooling equipment, networking systems, and other infrastructure supporting AI workloads.

However, connecting new facilities to existing electricity networks can take years, leaving companies searching for alternative ways to secure supplies.

Therefore, companies are now looking for any available and viable option for electricity to run their computing workloads.

Natural gas generators offer one option because they allow operators to produce electricity independently rather than depending entirely on public utility networks.

Even this option comes with its own downsides, as the backlog for natural gas turbine orders reportedly extends into the early 2030s.

This means that acquiring this equipment will be an uphill task for many companies that need it.

This generating equipment could therefore help Anthropic secure electricity capacity while reducing its dependence on increasingly constrained power infrastructure.

Natural gas expansion carries environmental and financial risks

Anthropic is not alone in turning to natural gas as technology companies seek electricity supplies for expanding data center operations.

Google, Amazon, Microsoft, and Meta have announced plans involving large gas-powered facilities intended to support their computing infrastructure.

“By owning some of their power infrastructure and having the capabilities in-house, companies believe they can better protect themselves against disruptions beyond their control,” said Arash Nazhad, a managing director and head of clean energy and power at Stifel.

The growing demand has also revived interest in hydraulic fracturing, commonly called fracking, which extracts natural gas from underground rock formations.

But expanding gas production carries environmental concerns, particularly involving land disturbance, emissions, and the consequences of increased fossil fuel consumption.

A recent projection suggests American data centers could consume more natural gas than Germany and Japan combined by 2035.

That potential increase comes alongside warnings that natural gas prices could rise substantially in certain markets before the decade ends.

Analysts expect prices in some markets to more than triple by 2030, potentially increasing operating expenses for companies dependent on gas-fired electricity.

Such increases could make privately generated electricity considerably more expensive, particularly for operators committing billions of dollars to generation equipment.

Anthropic’s investment therefore comes with financial exposure beyond the initial equipment purchase, including fuel expenses and the costs of maintaining generating facilities.

Despite this, it offers an immediate fix to the company’s current electricity challenge and may just be a dependable emergency power source.