NEW YORK — The cost of generating electricity from natural gas-fired plants in the United States has reached its highest level in at least 17 years, according to analysis from Lazard, and is expected to climb further amid surging power demand from data centers and artificial intelligence infrastructure.

Lazard's latest Levelized Cost of Energy report highlights how rising fuel prices, construction costs and operational expenses have pushed natural gas power costs upward. The findings come as the U.S. grapples with unprecedented electricity needs from technology companies building massive data centers to support AI training and cloud computing.

Natural gas remains the dominant source of electricity generation in the U.S., accounting for a significant share of the power mix. However, the economics of gas-fired plants have deteriorated in recent years as renewable energy costs have fallen and fuel price volatility has increased. Despite these challenges, gas plants continue to provide essential dispatchable power, particularly during periods of peak demand or when renewable output is low.

The report underscores a broader trend in the energy transition. While solar and wind have achieved record-low costs in many regions, the intermittency of renewables requires backup from flexible sources like natural gas. This dynamic has kept gas plants relevant even as their levelized costs rise.

Data center demand is a primary driver of the projected increases. Technology giants are investing billions in new facilities across the country, many in regions reliant on natural gas for reliable baseload power. The AI boom has accelerated these builds, with hyperscalers seeking constant, high-volume electricity to power servers and cooling systems.

Analysts estimate that data centers could double or triple power consumption in certain markets over the next decade. This surge strains existing infrastructure and boosts the value of gas-fired generation, which can ramp up quickly to meet fluctuating loads.

Lazard's analysis incorporates multiple factors, including capital costs, fuel expenses, operations and maintenance, and financing assumptions. The firm's levelized cost metric provides a standardized way to compare different........

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