KKR Sees AI-Driven Power Boom Doubling Gas Plant Costs to $3,000/kW
KKR•Surge in electricity demand from AI and data centers has triggered renewed investment in U.S. natural gas infrastructure, with new gas-fired plant costs rising from $1,000 to $3,000 per kilowatt. KKR projects private markets will lead financing under long-term contracts with hyperscale tech firms, reducing speculative risk.
1. AI Demand Sparks Natural Gas Rebound
KKR partner Brandon Freiman, who leads North American infrastructure, highlighted that a surge in electricity use from artificial intelligence and data centers has shifted power markets into a growth phase, renewing interest in natural gas development after years of stagnation.
2. Capital Costs Triple for Gas Plants
Freiman noted that the cost of constructing new gas-fired plants has risen from roughly $1,000 per kilowatt to about $3,000, reflecting higher materials, labor and regulatory expenses that make merchant builds less feasible without guaranteed revenue.
3. Private Markets Drive Long-Term Contracting
KKR anticipates most new projects will secure long-term contracts with utilities, industrial customers and major tech players—such as Amazon, Microsoft, Google and Meta—enabling private-credit providers and infrastructure investors to finance developments with predictable cash flows.
