Anthropic Invests $3.4 Billion in Gas Turbines

Key Takeaways

1Anthropic invests $3.4 billion in natural gas turbines capable of providing up to 1.7 GW

2The company had previously favored leasing and pays $1.25 billion per month to xAI until May 2029

3Supply timelines for the turbines and grid connection extend into the 2030s

4Cloud giants are ramping up gas power plant projects, with a risk of significant price increases

Why it matters : Anthropic's massive purchase illustrates the pressure on energy supply for AI and the risks associated with dependence on natural gas.

Faced with the growing difficulty of obtaining electricity for AI, Anthropic is investing $3.4 billion in gas generators capable of providing up to 1.7 GW. This decision comes as supply lead times are extending and gas prices could rise significantly by the end of the decade.

Lead Times Extending to the 2030s and Assumed Price Risks

The lead times for obtaining natural gas turbines are now extending into the early 2030s, while connecting to the electrical grid can take just as long. Dependence on natural gas also exposes operators of large data centers to price volatility. An analyst predicts that gas prices could more than triple in some markets by the end of the decade. If this scenario materializes, Anthropic could face challenges with this investment.

Direct Purchase of Caterpillar Generators After a OnePWR Option

Anthropic is dedicating $3.4 billion to the purchase of Caterpillar generators, initially ordered by OnePWR. These units can provide up to 1.7 gigawatts of electricity. OnePWR had placed the order a few years ago but was unable to secure the necessary funding. Anthropic had initially considered buying the turbines from OnePWR before turning directly to Caterpillar to finalize the acquisition.

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Massive Computing Rental and Planned IPO

Until now, Anthropic has favored renting infrastructure over purchasing. The company plans to go public this year. In an S-1 filing submitted in May, it indicated that it is paying $1.25 billion per month to xAI, a subsidiary of SpaceX, until May 2029 for access to computing power, and plans to enter into other similar contracts. The purchase of gas turbines thus adds to these already significant rental commitments.

Cloud Giants Betting on Gas and Reviving Fracking

AI companies are increasingly purchasing equipment that runs on natural gas. Google, Amazon, Microsoft, and Meta have announced plans for gas power plants to supply their on-site data centers, rather than relying on the public grid. This trend is contributing to a resurgence in hydraulic fracturing. If these projects come to fruition, American data centers could consume more natural gas by 2035 than Germany and Japan combined. This shift responds to a particularly strong demand for electricity deemed necessary for AI.