Nebius will install 328 megawatts of fuel cells at its U.S. data centers this year—enough to power roughly 250,000 homes. The first project is expected to be operational this year, eliminating the need for gas turbines at the site. The deal, announced Wednesday, carries service fees of up to $2.6 billion over ten years and marks one of the largest fuel cell deployments in data center history, according to Data Center Dynamics.
The move reflects a hard reality: "Power remains a key constraint for AI infrastructure build-outs," Nebius's chief product officer told reporters. U.S. data center power demand is expected to climb from 31 gigawatts in 2025 to 41 GW in 2026 and 66 GW the year after, Goldman Sachs Research projected this week. That's more than double in two years. But the grid can't keep up. Wholesale electricity prices across America's largest power grid jumped 76 percent in the first quarter of 2026, driven by surging demand from AI data centers, according to Monitoring Analytics. The cost of wholesale power across the 13-state PJM grid rose from $77.78 per megawatt-hour in Q1 2025 to $136.53 in the same period this year.
Fuel cells offer a way out. The modular fuel cells can be sited and commissioned on accelerated timelines, reducing dependence on new transmission build and shortening time-to-power for Nebius and its end customers.
Fuel cells convert natural gas directly into electricity without combustion, achieving 15% to 20% higher efficiency than most open-cycle gas turbines or reciprocating engines, according to Bloom Energy's recent white paper. Bloom fuel cells generate electricity without combustion, making them highly efficient with low emissions and minimal water use.
Can Behind-the-Meter Power Solve the Interconnection Crisis?
The grid interconnection queue has become a graveyard for data center ambitions. Orders for a turbine today may take until 2031 to arrive, Wood Mackenzie reported earlier this month. That's a five-year wait for a single piece of equipment. Behind-the-meter generation—power produced on-site, bypassing the utility grid entirely—sidesteps the problem.
Nebius is tackling that head-on with a long-term deal for solid-oxide fuel cells that will generate power directly at its data centers, bypassing overloaded utility grids and years-long connection queues.
The first project, delivering an initial 250 MW, is scheduled to come online in 2026 in Independence, Missouri. Nebius had originally planned to use gas turbines at that location but switched to fuel cells to slash both water consumption and emissions.
The strategy is spreading. Jefferies analysts noted AEP's contract for 100 MW of fuel cells from Bloom Energy, with an option to increase to 1 GW, among the utility's "bridge solutions" to serve data centers while grid upgrades are completed. Bloom Energy's stock rose 12% on the Nebius announcement, CNBC reported.
The economics are stark. The two most recent PJM capacity auctions factored in data center demand projections that collectively added $13 billion to customer bills across the grid. That figure lands on ratepayers, not on the technology companies whose facilities generated it. Fuel cells shift the cost—and the control—back to the data center operator.
Is Natural Gas Making a Comeback on the Power Grid?
While fuel cells burn gas cleanly on-site, the broader U.S. power sector is also turning back to natural gas-fired generation. Natural gas-fired power generation is making a comeback, with about 107 GW of new-build capacity scheduled to begin construction over the 2026-2030 period. That's about 40 GW higher than the planned gas-fired plant kickoffs for 2025-2029, according to Turbomachinery Magazine's industry outlook.
As a share of total planned capacity, natural gas fell from 24.1 percent in 2022 to 11.1 percent in 2024, but bounced back to 18.1 percent in 2026, the American Action Forum found in its analysis of EIA data. Gas generation is making a big comeback, driven by a wave of data centers flooding into the state. For the last six months, the volume of gas generation in the Texas grid's interconnection queue has surpassed wind, the Texas Tribune reported.
The shift is visible in near-term projections. U.S. natural gas-fired generation totals 1,696 BkWh in 2026, about the same as in 2025, and then increases to 1,711 BkWh in 2027 as overall power demand increases, the EIA said in its Short-Term Energy Outlook. Natural gas-fired generation increases 23% in ERCOT between 2025 and 2027 and 5% in the Mid-Atlantic area of the country where the grid is managed by PJM Interconnection. The regional growth in natural gas-fired generation responds partly to the growing electricity demand from data centers.
The Financial Times asked this week whether gas is making a comeback on the U.S. power grid. The answer, according to grid operators and project pipelines, is yes—though not in the way the industry expected five years ago. Data centers, not residential demand, are driving the resurgence.
