Why Data Center Developers Keep Choosing Gas: Noreva’s Market Read

What the Heatmap coverage examined

The Q&A asked how federal policy is shaping the choice between gas and alternatives such as renewables and nuclear for data center power. It covered behind-the-meter gas projects, changes to Clean Water Act implementation, an EPA proposal on the Clean Air Act, and the rush to bring renewables online before the July 4 tax cliff.

It then turned to capital and risk: whether the boom is pulling money away from zero-emission generation, and how seriously investors take opposition to data centers as a medium- and long-term risk. Heatmap notes the conversation was lightly edited for clarity.

On why gas is the default choice, Gardett pointed to the economics and to the price assumption behind them. What he tells people, he said, is that “every private equity firm has a behind-the-meter 1 gigawatt natural gas project they’d like to move forward.” “They look at the futures curve and think the prices will be stable for this fuel in the future, I would argue discounting some of the likely volatility drivers that exist.”

He described the large hyperscalers’ strategy as a push for self-supply: “There’s clearly a rush to island yourself with your natural gas supply and let the rest of the world do what it might, if you’re a large hyperscaler.”

Asked how much of that rush comes from federal policy, Gardett named two changes, Clean Water Act implementation and an EPA proposal on the Clean Air Act: “There have been major changes to implementation of the Clean Water Act that provably have been part of what’s enabled large construction of data centers and the accompanying power.” “We saw a proposal from the EPA to allow states to implement some parts of the Clean Air Act, which would certainly make it easier for them to build large gas generation that accompanies a large load.”

He tied this to a pattern he calls “the great data center migration”: “You have everyone moving down to the AI band, to West Texas to Georgia, that strip of states is where large data centers are moving and where the power will follow.”

On renewables, Gardett said there is “plenty of demand.” He cited a PPA project he is working on for a client that shows “PPA prices having tripled in some regions” (Peter Gardett, quoted by Heatmap News, 07/2026). He added: “If you can get your hands on an electron you’re going to pay for it and go ahead.”

Asked whether the boom is redirecting capital away from green power, he answered directly: “This is not a trade-off moment. It’s an expansion moment.”

On opposition risk, Gardett said a number of large institutional asset managers take PJM demand destruction very seriously. He added that “there are several large projects in PJM that are announced and appear on paper to be fully financed that are actually in cold storage until there is a better understanding of what is going to happen with large load, in PJM and Pennsylvania in particular.”

He said it is “very difficult to get this capital running in one direction and have an ISO operator say it’s too expensive or puts too much on ratepayers,” and that attempts to build a parallel market for large-load power are much more difficult to pull off. His closing line: “This is why more people are turning to behind the meter and to gas.”

Why it matters for asset owners and investors

Gardett’s answers read the market, with policy as one input among several. Private equity sponsors read the futures curve as stable. Gardett argues that read discounts likely volatility drivers. He also says several announced PJM projects that appear fully financed on paper are in cold storage until the outlook for large load is clearer. His “expansion moment” cuts both ways for asset owners: more capital moving into gas-fired supply for data centers, and more exposure to the price of the fuel under it. That is why Noreva publishes natural gas forecasts alongside its power and capacity curves.