Richard D. Kinder
Executive Chairman at Kinder Morgan
Thank you, Sue. As usual, before we begin, I'd like to remind you that KMI's earnings release today and this call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities and Exchange Act of 1934 as well as certain non-GAAP financial measures. Before making any investment decisions, we strongly encourage you to read our full disclosures on forward-looking statements and use of non-GAAP financial measures set forth at the end of our earnings release as well as review our latest filings with the SEC. For important material assumptions, expectations and risk factors that may cause actual results to differ materially from those anticipated and described in such forward-looking statements.
Now on these investor calls, I'd like to share with you our perspective on key issues that affect our Midstream Energy Segment. I previously discussed increased demand for natural gas resulting from the astounding growth in LNG export facilities. And last quarter, I talked about the expected growth in the need for electric power as another significant driver of natural gas demand. Since that call, there has been extensive discussion on this topic with the consensus developing that electricity demand will increase dramatically by the end of the decade, driven in large part by AI and new data centers. I'm a firm believer in anecdotal evidence, particularly when it comes from the actual users of that power and the utilities who will supply it and from the regulators who have to make sure that the need gets satisfied. And the anecdotal evidence over the last few months has been really [Phonetic] jaw-dropping. Let me give you just a few examples.
In Texas, the largest power market in the US, ERCOT now predicts the state will need 152 gigawatts of power generation by 2030. That's a 78% increase from 2023's peak power demand of about 85 gigawatts. This new estimate is up from last year's estimate of 111 gigawatts for 2030.
Other anecdotal evidence also supports a vigorous growth scenario. For example, one report indicates that Amazon alone is expected to add over 200 data centers in the next several years, consistent with the large expansions being undertaken by other tech companies chasing the need to service AI demand.
Annual electricity demand growth over the last 20 years has averaged around 0.5% of 1%. Within the last 60 days we've seen industry experts predict annual growth from now until 2030 at a range of 2.6% to one projection of an amazing 4.7%. So the question becomes, how will that demand be satisfied and how much of a role will natural gas play? Many developers of data centers would prefer to rely on renewables for their power, but achieving the needed 24/7 reliability by relying only on renewables is almost impossible and growth in usage is limited by the need for new electric transmission lines, which are difficult to permit and build on a timely basis.
Batteries will help some and some tech companies now want to use dedicated nuclear power for their facilities. But as the Wall Street Journal recently pointed out, they will likely increase reliance on natural gas to replace the diverted nuclear power. Again, anecdotal evidence in key -- is key. In Texas, a program that would extend low-cost loans for new natural gas-fired generating facilities was massively oversubscribed, which in ERCOT official predicting today's gas daily could result in an additional 20 gigawatts to 40 gigawatts just in the state of Texas. And the Governor has already suggested expanding this low-cost loan program. That over-subscription, I think is clear evidence that the generators are projecting increased demand for natural gas-fired facilities. Perhaps, Ernest Moniz, Secretary of Energy under President Obama summed it up best when he said and I quote, there's some battery storage, there's some renewables, but the inability to build electricity transmission infrastructure is a huge impediment, so we need the gas capacity.
As an example of how industry players see the world developing, S&P Global Insights as quoted in Gas Daily reports that US utilities plan to add 133 new gas plants over the next several years. And this view is reflected in the significant new project in the Southeastern United States that we are announcing today. While it's hard to peg an exact estimate of increased demand for natural gas, as a result of all this growth and the need for electric power, we believe it will be significant and makes the future even more robust for natural gas demand overall and for our midstream industry.
And with that, I'll turn it over to Kim.
