Huge gas plant eyed to power mystery $5B Louisiana data center

This story was originally published by Floodlight.

In rural northeast Louisiana, known for its rice, sweet potato farms and poverty, an as-yet-to-be-named company has agreed to build a new data center with an investment of at least $5 billion. The development is being called a “godsend” and a “game changer” for the region, where one in five people lives in poverty.

Next to the site, off Interstate 20 in Holly Ridge, electric utility Entergy plans to build a 1,500-megawatt natural gas plant to power the data center. The data center, the power plant, or possibly both, will be built on a 1,400-acre site, called Franklin Farms, owned by the state, according to filings with the Louisiana Public Service Commission. Entergy would spend $3.2 billion on the plant, a related 754-MW gas plant to be built in South Louisiana and transmission lines.

Over the last several months, concern has arisen that the construction of fossil-fueled power plants to provide power to the proliferation of U.S. data centers will slow progress on the nation’s climate change goals.

“Entergy is proposing to add huge amounts of greenhouse gas emissions, with proposals to mitigate those emissions ‘in the future’ with largely unproven technologies,” said Whit Cox, regulatory director of the Southern Renewable Energy Association, which has filed to intervene in Entergy’s request. And a Louisiana utility consumer group questions whether the cost of the new plants will be passed onto residential customers.

Details about the data center are cloaked in secrecy and non-disclosure agreements. But Entergy Louisiana has filed hundreds of pages of redacted documents with state regulators about its dealings with the unnamed company. In its filings, Entergy says the data center will employ 300 to 500 people with an average salary of $82,000. The utility calls the development a “game changer” that will bring “an historic investment” to the region.

The utility is asking the Louisiana PSC to approve construction of the new power plant — where the primary customer will be the data center — within 10 months.

‘Skyrocketing’ Demand Driving Data Centers

With the development, Louisiana would join a cohort of states building natural gas power plants to meet the pressing demand for electricity to run data centers being built by Amazon, Meta, Google and others.

Data centers are forecast to account for up to 12% of all U.S. electricity demand by 2030, according to consulting firm McKinsey and Co., citing “skyrocketing compute and data demands.” Today that amount is 3% to 4%, McKinsey said. The firm estimates the need for 50,000 MW of new electricity to run the data centers over that time frame.

“We see (the gas buildout) as a huge threat — we are at a moment where we need to be phasing out fossil fuels and not locking it in for decades longer,” Gudrun Thompson, energy program leader for the Southern Environmental Law Center told Floodlight earlier this year.​​ 

The company building the Louisiana data center appears to be aware of those concerns and is working with Entergy to offset its emissions according to Entergy’s filings. The company wants Entergy to build or acquire 1,500 MW of solar power elsewhere to offset its emissions in Holly Ridge.

Additionally, the unnamed company is “expected to make a substantial contribution” toward the cost of carbon capture and storage at Entergy Louisiana’s new Lake Charles 994 MW gas power plant. The power plant in Holly Ridge also would have the capability of using up to 30% hydrogen — which doesn’t emit carbon when burned — as part of its fuel mix, according to Entergy. 

The utility said it evaluated other alternatives to provide electricity to the data center, including wind or solar, but concluded it would still have to build a natural gas power plant on site as backup generation because such renewable sources do not generate electricity around the clock.

But Michelle Solomon, an analyst with the nonprofit climate think tank Energy Innovation, says Entergy’s analysis is flawed. With battery storage — an affordable solution that is being used elsewhere — solar or wind could easily be deployed, she said.

“Louisiana is far from the clean electricity mix of even one of its closest neighbors, let alone cleaner grids around the world, indicating that it can easily integrate even large amounts of new renewable resources,” she said, noting that less than 1% of Louisiana’s energy comes from wind and solar, combined.

The utility said in its filings it has committed to the data center to explore other lower emission power options, such as wind and even nuclear, to help the company meet its sustainability goals.

Cox, of the Southern Renewable Energy Association, said its members could provide renewable power to the data center at a lower cost with no greenhouse gas emissions. If the PSC grants Entergy’s request to forego competitive bidding for the power plant — essentially shutting renewable and other energy developers out of the process — it could increase the cost to Entergy and its customers, he said.

In a bid to reduce greenhouse gas emissions, several large tech companies are supporting efforts to develop small modular nuclear reactors. A recent report from Moody’s Ratings says small reactors face regulatory and cost barriers, but large tech companies with strong balance sheets, such as Google and Amazon, might be best positioned to push such developments forward.

Could Project Drive Up Ratepayers’ Bills?

In addition to concerns about how more gas-fired power plants will impact the world’s climate, Louisiana residents have more localized worries.

Costs not paid by the data center, either through electricity rates or separate agreements, would be spread across Entergy’s 1.1 million Louisiana customers, although the utility says the proposed deal “largely insulates (Entergy’s) other customers from paying for the upgrades required” for the data center.

“We’ve got a lot of questions regarding cost allocation, but also concerns about how much this has been fast-tracked,” the Alliance for Affordable Energy said in a recent newsletter.

On Nov. 20, the PSC will take up the project for the first time as it considers hiring outside consultants to help evaluate the proposal. In addition to the Southern Renewable Energy Association, the Large Energy Users Group, consisting of major industrial energy users including Chevron and Dow, has requested to intervene in the case.

Commissioner Foster Campbell, a Democrat who represents North Louisiana, has been consistently skeptical of plans for new power plants and additional charges on electricity bills. This time, he is championing the new development in his home territory.

“I'm always interested in what it's going to cost,” he said. “But this is a different program, because it delivers so much, so many jobs, good paying jobs for North Louisiana,” Campbell said. “I mean, I want to keep everything in perspective, but I can't help but thank God. Northeast Louisiana needs help more than any part of Louisiana. So, it's a godsend.”

Floodlight is a nonprofit newsroom that investigates the powerful interests stalling climate action.