AI Data Center Power Gap Widening, Reciprocating Engines Seen Replacing 1GW by 2027-2028

According to SemiAnalysis on July 21, artificial intelligence data centers are reshaping power supply strategies as electricity demand surges. Reciprocating engines, traditionally used as backup systems during grid failures, are being repositioned as primary all-day power sources. Manufacturers have already secured contracts for approximately 1 gigawatt of behind-the-meter power projects this year, with supply expected to exceed 4 gigawatts annually in 2027 and 2028.

SemiAnalysis estimates that current U.S. grid capacity reserves will be depleted by 2027-2028, with planned utility-scale generation through 2030 insufficient to meet data center demand growth. The firm identifies roughly 140 gigawatts of potential data center projects still lacking power supply contracts, many likely to adopt behind-the-meter solutions. Among competing technologies, reciprocating engines are projected to dominate due to lower costs, rapid deployment, modularity, and stronger financing support from manufacturers including Caterpillar, INNIO, and Cummins.