Combined Cycle Plant Costs Soar Over Threefold, NextEra CEO Reveals at CERAWeek 2025

Houston, Texas – The cost of constructing combined cycle natural gas power plants has surged by more than threefold since 2022, according to John Ketchum, President and CEO of NextEra Energy. This significant increase was highlighted during the CERAWeek by S&P Global conference held in Houston in March 2025, amidst growing concerns over energy supply to meet escalating demand from artificial intelligence (AI) data centers.

Ketchum stated that a combined cycle unit built in 2022 cost approximately $785 per kilowatt. "If we wanted to build that same gas-fired combined cycle unit today it would cost $2,400 a kilowatt — the cost of gas-fired generation has gone up more than threefold," he remarked, attributing the rise to factors such as high demand for gas turbines, supply chain disruptions, and labor shortages. The energy executive’s comments underscore a critical challenge facing the power sector as it grapples with unprecedented electricity demand.

The CERAWeek conference, a major annual gathering for energy leaders, prominently featured discussions on the energy-intensive nature of AI and data centers. Experts noted that electricity consumption by data centers could triple by 2028, making them a primary driver of new power demand. While natural gas is being pitched as a crucial solution for reliable, round-the-clock power, the spiraling costs and lengthy lead times for new gas plants present a significant hurdle.

NextEra Energy, one of the largest power plant developers in the U.S., has observed that adding new gas generation faces challenges beyond just cost, including a five-year lead time to bring a plant online. Ketchum emphasized that renewable energy sources are often "cheaper and quicker to build" in comparison. Turbine manufacturers like GE Vernova have acknowledged backlogs stretching through 2028, with some analysts suggesting that manufacturers are prioritizing profit margins over rapid capacity expansion.

The substantial increase in construction costs for combined cycle plants, coupled with supply chain bottlenecks and labor scarcity, indicates a complex environment for energy infrastructure development. These challenges are further exacerbated by potential policy shifts, such as the possible repeal of Inflation Reduction Act tax credits for renewable projects, which could push costs even higher. The industry faces a delicate balance in meeting surging energy needs while managing economic and logistical pressures.