Anthropic is spending $3.4 billion on natural gas turbines.
The company, which usually avoids buying physical infrastructure, is purchasing Caterpillar generators that equipment supplier OnePWR had originally ordered. A Financial Times report states the generators can produce up to 1.7 gigawatts of electricity. Anthropic plans to go public this year.
From renting to owning
Historically, Anthropic has preferred renting rather than buying. The company disclosed in its S-1 filing in May that it is paying SpaceX subsidiary xAI $1.25 billion per month through May 2029 to use xAI’s computing power.
“We expect to enter into additional similar services contracts,” Anthropic stated in the filing, meaning more deals to rent computing power.
But as demand for compute ramps up, the market for power has also grown increasingly uncertain, which may have forced its hand. The backlog for natural gas turbines stretches into the early 2030s, and queues to connect to the electrical grid can be just as long.
Anthropic’s purchase looks like a last resort.
According to the report, OnePWR ordered the turbines a couple years ago, but couldn’t find financing to complete the purchase. Anthropic had planned to buy them from OnePWR but instead went directly to Caterpillar, the manufacturer.
It is not clear why OnePWR was unable to secure financing despite Anthropic’s apparent interest as a customer. Whatever the case, Anthropic likely wanted to keep the generating capacity to itself rather than give a competitor an opportunity to snap it up.
Industry trends and risks
AI companies have been ramping up their purchases of natural gas equipment and supplies in recent years. Google, Amazon, Microsoft, and Meta have all announced plans to build massive natural gas power plants to power their data centers on site, rather than drawing from the public grid.
The binge has given a second wind to fracking, the drilling method used to extract natural gas from underground rock. And if the buildout proceeds as planned, U.S. data centers alone could consume more natural gas than Germany and Japan combined by 2035. The reliance on natural gas also exposes hyperscalers to price fluctuations. One analyst expects that prices could more than triple by the end of the decade in some markets. If that happens, Anthropic might have a serious case of buyer’s remorse.
