Home Business Energy and Utility Arizona Utilities Secure Gas C...

Arizona Utilities Secure Gas Capacity for Expanding Data Center Demand

Energy and Utility

Business Honor - Arizona Utilities Boost Gas for Data Centers

Business Honor
12 August, 2025

APS and SRP acquire natural gas capacity from Energy Transfer to support Arizona’s expanding data center demand.

Two large Arizona utilities, Arizona Public Service (APS) and Salt River Project (SRP), have locked in natural gas capacity from Energy Transfer's Transwestern Pipeline Desert Southwest expansion project to supply the state's rapidly expanding data center industry with growing energy demand. The $5.3 billion expansion of the pipeline will add 516 miles to the existing 2,590-mile system and increase its capacity by 1.5 billion cubic feet per day (Bcf/day). The expansion is principally driven by the need for more natural gas to fuel giant power plants, which in turn will supply electricity to Arizona's growing data center sector. APS, the project's anchor customer, will use this gas in power plants that will power only data centers, a rapidly expanding market in the state.

Arizona is already becoming a regional data center hub, with more than 129 in operation statewide, including giant tech firms like Meta, AWS, Google, and Microsoft. APS has already seen a substantial rise in high-load demand, with nearly 4.5 gigawatts (GW) of data center-only committed demand. This expansion of data center facilities has created the demand for more gas-fired power generation capacity.

Under the agreement, APS will spend as much as $7.3 billion in 25 years on buying gas from the pipeline expansion. The utilities intend to add new power plants on line with the pipeline's forecasted completion in 2029. Natural gas now provides 45% of Arizona's electricity generation, so the state is heavily dependent on gas-fired generating facilities. This news highlights the growing overlap of energy infrastructure and the tech industry, as utility companies like APS and SRP move to ensure a steady and reliable source of natural gas in response to the rising power requirements of Arizona's data center market.