Background
Gas turbines have been crucial to U.S. electric power generation, with natural gas supplying about 43% of utility scale electricity in 2023 and an estimated 37% in 2024, according to the Energy Information Administration (EIA) (EIA, 2026). Current turbine facility designs include simple cycle combustion turbines (CTs) and highly efficient combined cycle gas-turbine (CCGT) plants, with over half of the nation’s 491 gigawatts of natural gas fired capacity configured as CCGT. CCGT growth is due to the power-generation efficiencies of this design while CTs allow for operational flexibility in ramp-ups and turndowns.
This expanded use of natural gas as a fuel for electricity production, particularly for CCGTs, has contributed to substantial environmental gains in the form of a decrease in greenhouse-gas emissions (EIA, 2022). To elaborate, power sector carbon dioxide emissions fell 32% between 2005 and 2019, driven largely by fuel switching from coal to natural gas and improvements in plant efficiency (EIA, 2021).
Although rapid, renewable power-generation development tempered new gas fired construction in recent years due to state and federal regulatory initiatives, the pendulum is beginning to swing back to natural gas due to increasing power demands nationwide. Developers currently plan 18.7 gigawatts of newly constructed CCGT capacity through 2028, signaling renewed investment in gas fired resources to support rising demand (EIA, 2025). At the same time, the EIA projects the strongest four year growth in U.S. electricity use since 2000, driven in large part by expanding data center loads for AI and cloud computing, further underscoring the systemic role gas turbines are expected to play to support this increase in power demand (EIA, 2026).
Why Gas Turbines for Data Centers?
Natural gas is the largest U.S. power source, supported by pipeline delivery that supplies the majority of gas consumed in power generation (EIA, 2025; Department of Energy [DOE], 2024). Gas turbines also provide emissions and operational advantages, including fast start and fast ramping capabilities to track highly variable computing loads as renewable energy penetrates a wider swath of the market (EIA, 2024). Their dispatchable, quick ramping profile allows them to function as a “shoulder” resource, reliably bridging the gap between baseload supply and intermittent renewable energy sources to keep mission critical data center operations online (National Petroleum Council, 2025; EIA, 2024).
Gas turbines’ speed, flexibility, scalability, and operational efficiency present an advantage for meeting the rapidly expanding power demands of data centers (DOE, 2024). Their comparatively short construction and commissioning timelines allow developers to bring new capacity online far more quickly than most alternatives, a critical benefit as long grid connection queues push operators toward on site generation that can typically be deployed in months rather than years (EIA, 2025). In addition, many gas-turbine units, particularly simple cycle configurations, can be installed or redeployed to follow the geographic clustering of AI campuses (EIA, 2025). Fuel accessibility further strengthens their suitability.
Integrated Tax Benefits to Consider for the New U.S. Gas Turbine Surge
For data center projects, an integrated tax plan can materially improve project economics across property tax, sales and use tax (SUT), and federal income tax advisory workstreams.
Property Tax
- Coordinated incentives (including zone based tools, rebates and expedited permitting) can be negotiated alongside site selection decisions to reduce life-cycle values and associated liabilities;
- Precise taxability forecasting and depreciation modeling, supported by comprehensive obsolescence analyses, help ensure that assessments are appropriately calibrated throughout construction and the initial phases of operation; and
- Targeted pollution-control property tax exemptions can remove qualifying environmental equipment (including elements serving the power supply to the facility) from power plants’ valuation for taxation—often as much as 10% to 15% of the original cost—delivering meaningful lifetime tax savings that continue with proper compliance.
SUT
- Careful engineering, procurement and construction contract structuring, capital investment segregation, and exemption certificate controls minimize tax on qualifying equipment, materials and utilities while mid project SUT reviews help safeguard exemptions and ensure audit readiness.
Federal Tax
- Specialized advisory entities support modeling and monetization of clean energy related credits, diligence for transferability, optimization of bonus and stacked incentives, tax equity structuring and end to end compliance and reporting capabilities that, taken together with integrated tax impact modeling, can improve cash flow and support faster, better informed investment decisions for large data-center power programs.
If you are considering investment in data-center power sources, Kroll can enhance the profitability and probability for success of these projects through integrated federal, state and local tax planning, site selection and incentives advisory services.
Sources:
DOE Releases New Report Evaluating Increase in Electricity Demand from Data Centers | Department of Energy
Total Energy Monthly Data - U.S. Energy Information Administration (EIA)
NPC_gas-electric_report_2025-12-3.pdf
https://www.eia.gov/outlooks/steo/report/BTL/2023/02-genmix/article.php
https://www.eia.gov/todayinenergy/detail.php?id=52158
https://www.eia.gov/todayinenergy/detail.php?id=48296
https://www.eia.gov/todayinenergy/detail.php?id=65464
https://www.eia.gov/pressroom/releases/press582.php
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