Authored by the National Propane Gas Association (NPGA)
The rapid expansion of data centers driven by digital commerce, cloud computing, artificial intelligence and remote work is reshaping energy demand in the United States. These facilities are critical infrastructure, supporting communication networks, financial systems, healthcare and national security. However, data center growth is colliding with serious challenges in the existing electric grid, including transmission bottlenecks, interconnection delays and the challenge of integrating renewable sources. These factors elevate the need for reliable, resilient and lower-emission onsite power sources that can support data centers when utility power is unavailable or insufficient without sacrificing the health and utility rates of residents.
In response to these trends, the National Propane Gas Association (NPGA) published Powering the Digital Age: Propane’s Role in Low-Emission Data Center Infrastructure (PDF), a white paper that analyzes propane’s potential as an alternative fuel for data center energy requirements with a particular focus on backup and distributed power generation. The paper offers modeling of potential propane consumption across various classes of data centers and makes the case that propane can serve both operational and environmental objectives in a way that complements grid infrastructure and supports data center reliability.
Data Center Growth and Energy Challenges
Data centers consume power 24/7, not only for computing operations but also for cooling systems, security, networking hardware and backup power. As these facilities scale, they increasingly strain local grid capacity, compounding timelines for the completion of new transmission infrastructure. The Energy Information Administration has documented that average electric system outage times roughly doubled between 2013 and 2020. A report from the U.S. Department of Energy (PDF) found that in 2023, data centers consumed approximately 4.4 percent of all US electricity and are expected to consume up to 12 percent of all US electricity by 2028. If the predicted load cannot be met, regardless of additional investment made in grid infrastructure, then ratepayers may face the burden of higher energy bills.
The Institute for Energy Economics and Financial Analysis estimates that data centers were responsible for an added $9.3 billion in additional costs to electricity ratepayers. One data center in northern Virginia (PDF) partnered with Virginia’s largest utility organization to construct a 300-megawatt substation on-site, solely to provide direct power. As power demand surges and utility commissions struggle to evenly distribute the financial burden, the need for co-located, dispatchable energy sources is becoming critical. If the need for ready power is not met, ratepayers will be forced to pay higher premiums due to increased competition for limited power.
Propane’s Emissions Portfolio
The environmental impact of data center expansion is significant. Morgan Stanley estimates that roughly 40 percent of all carbon emitted in the US by 2030 will come from data centers, while globally, the data center industry will emit 2.5 billion tons of CO2 by 2030. Roughly 31 percent to 61 percent of data center carbon emissions fall within scope 2 emissions, which encompasses emissions from the generation of electricity purchased by an organization and used to power operations (PDF). A majority of scope 1 emissions from data centers, however, come from diesel usage for back-up generators and natural gas for heating.
As data centers expand, operations must keep pace with the growing push to meet sustainability and decarbonization goals by both governments and shareholders. Fortunately, propane:
- Is classified as a clean alternative fuel under the Clean Air Act of 1990 and the National Energy Policy Act of 1992 (40 CFR 85).
- Is more efficient than grid electricity, considering more than 60 percent of energy used for electricity generation is lost in conversion.
- Has an excellent source-site ratio of 1.01, compared to 2.80 for electricity from the grid, meaning almost no energy is lost (PDF) as it travels from tank to application.
- Is completely methane-free.
Prospective data centers need power immediately and propane serves as a drop-in solution to meet demands. Once fuel usage is estimated based on a data center’s power needs, the requisite amount can be delivered on a perpetual schedule with spot refueling as needed. After an appropriate generator set or microgrid is installed, data centers can have behind-the-meter, 24/7 available power without interconnection delays or burdensome regulatory hurdles. For developments choosing propane for primary generation needs, there is no need to seek utility approvals for tank installation, and there is no concern of downtime during grid outages. Propane can be paired alongside renewable energy sources to decrease carbon emissions while ensuring reliable, 24/7 power (e.g., running propane generators at night and during inclement weather when solar energy is not available).
According to the Propane Education & Research Council (PDF), propane-fueled power generation can be scaled modularly, enabling data center developers to deploy capacity in phases aligned with construction schedules. This flexibility allows facilities to monetize operational space earlier and avoid the all-or-nothing timelines of large grid interconnection projects.
Conclusion
The accelerating growth of digital infrastructure — driven by artificial intelligence, cloud services and data-intensive applications — is exerting unprecedented pressure on the US electric grid. Data centers represent a significant share of national electricity demand, and their rapid expansion is colliding with transmission constraints, prolonged interconnection timelines and increasingly stringent environmental regulations. Simultaneously, the sector requires unmatched reliability, as even brief interruptions carry significant economic and operational consequences. Propane is the scalable fuel that can meet all demands placed on the rapidly growing data center sector, providing clean power for technology that serves billions globally and communities at home.
To learn more, read through Powering the Digital Age: Propane’s Role in Low-Emission Data Center Infrastructure (PDF), or reach out to NPGA to find out more about propane and its place for your municipality.
Visit the NLC Strategic Partnerships page to learn more about the organizations like NPGA dedicated to making NLC the premier resource for local governments.
A Primer for Local Governments: Understanding Data Centers
Explore NLC’s fact sheets taking a closer look at the environmental impacts of data centers — including energy use, emissions and water consumption — as well as land use, zoning and community planning considerations to help cities manage growth and align development with local priorities.
Executive Actions Fact Sheet: Protecting the Great Lakes from Invasive Carp
Executive Actions Fact Sheet: Ending Market Distorting Subsidies for Unreliable, Foreign Controlled Energy Sources
Understanding EPA’s Reuse Considerations for Data Centers on Brownfield and Superfund Sites
- Christopher Jordan
What Does “Efficiency” Really Mean for Cities Right Now?
- NLC Partnerships
Local Infrastructure Hub Archive
NLC’s Federal Update: DHS Shutdown, FEMA Review Council Extension and BRIC Funding
- Yucel Ors