FT: US set to overtake China in fossil fuel power investment

Investment in fossil fuel-fired power generation in the US is expected to exceed that of China for the first time in decades, driven by soaring demand for gas-fired power plants to supply the rapidly expanding artificial intelligence sector, Financial Times reports, citing projections from the International Energy Agency (IEA).

According to IEA data obtained by the newspaper, spending on US coal- and gas-fired power plants is forecast to reach $50 billion this year—around $3 billion more than China.

The surge in investment reflects both a sharp increase in orders for gas-fired turbines and rising equipment costs as demand continues to outpace manufacturing capacity.

The IEA estimates that US customers ordered approximately 20 gigawatts of gas-fired turbines during the first quarter of 2026. Modern AI data centers typically require between 1 gigawatt and several gigawatts of electricity, comparable to the power consumption of a major Western city.

Most of the new turbines are expected to be used for behind-the-meter electricity generation, allowing companies to produce their own power rather than rely on the public grid.

Major manufacturers, including Siemens and GE Vernova, are facing record demand as technology giants such as Alphabet, Amazon, and Meta Platforms compete to expand their AI infrastructure. GE Vernova said its first-quarter order backlog had reached $18 billion.

The expansion comes as President Donald Trump rolls back climate regulations and clean energy incentives in an effort to support the fossil fuel industry. Energy analysts have warned that the administration's policies are slowing the pace of decarbonization.

"Gas-fired turbines have seen a massive increase in price," said Reid Ramdathsingh, a power analyst at Rystad Energy, noting that costs have climbed from about $800 per kilowatt-hour to more than $2,500. He added that gas-fired generation is playing an increasingly important role in stabilizing electricity grids as larger shares of intermittent renewable energy sources, including wind and solar, come online.

The findings follow the Energy Institute's latest Statistical Review of World Energy, which showed that US coal consumption rose 10% in 2025 after a 50% increase in natural gas prices made coal-fired generation more economically attractive. The trend continued this year amid disruptions linked to the conflict in the Middle East.

While China continues to invest heavily in coal-fired generation, the country also remains the global leader in renewable energy deployment. By the end of 2025, China had installed approximately 1.2 terawatts of solar capacity, accounting for roughly half of the world's total, and continues to add more clean energy capacity annually than most countries possess overall.

Despite the rapid growth of renewables, the Energy Institute's report found that fossil fuels still accounted for more than four-fifths of global energy supply, while global carbon emissions increased by 1.1% in 2025.

"We see encouraging substitution of fossil fuels in power, yet global emissions continue to rise and energy security pressures intensify," said Nick Wayth, Chief Executive of the Energy Institute.

"These findings underline the urgency of accelerating efficiency, electrification and investment in clean technologies worldwide," he added.

By Vafa Guliyeva