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US President Donald Trump’s plan for Japan to build a massive gas power plant in Ohio promises a flood of electricity in a region desperate for it. It also heralds risks for others eager to meet the demand — but without the same political support.
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The prospect of going up against a mammoth, Trump-backed competitor sparked fresh discussion Wednesday that the venture threatens to crowd out capital and imperil other projects, according to two power sector representatives who asked not to be named because the conversations were private.
One said it would prompt companies to reevaluate their own plans to build plants. Some developers will pause while the industry waits for more details about the deal, the representative said, adding there’s currently not enough information to fully assess risks.
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The project — which would involve SoftBank Group Corp. — is expected to summon some $33 billion in Japanese investment toward what would be the biggest power plant in the US. At a potential nameplate capacity of 9.2 gigawatts, the facility would be more than nine times the size of most modern natural gas-fired power plants in the US today.
That has the potential to slow or sideline other projects vying to supply power to Midwest residents, businesses and data centers, analysts and developers said. And, it could provide power at a time when energy-hungry data centers, growing electrification and industrial projects require ever more of it.
“Other projects in the region are likely to raise an eyebrow and be concerned about what this may mean for competition,” said Timothy Fox, an analyst with the research firm ClearView Energy Partners.
“This kind of muscular industrial policy can crowd out private sector capital,” Fox added. “If you have a competitor that has the federal government behind it, that can raise risk both in what to expect in the markets but also in capital formation.”
The planned investment — brokered in the wake of last year’s US-Japan trade pact — comes as both the states and the federal government have been moving more aggressively in the private sector — and to shape energy markets. For instance, many states have adopted renewable power mandates, and Texas has established an energy fund meant to finance the construction of gas power plants.
Under Trump, the US also has taken financial stakes in Intel Corp., MP Materials Corp. and other ventures, while seeking a portion of revenue from the sale of advanced AI chips to China and securing a golden share as part of Nippon Steel Corp.’s acquisition of United States Steel Corp.
A White House official said the administration is working with all parties to ensure America’s energy supplies meet growing technology demands while keeping consumers’ energy prices low.
The Trump project announced Tuesday would supply the electric grid operated by PJM Interconnection LLC, which is processing requests for about 5.5 gigawatts of proposed gas projects that will be completed by the end of 2026. Developers of another 5.8 gigawatts of gas projects already have signed agreements to connect to the grid and can proceed with construction.
Projects waiting in the wings include the 1.3-gigawatt Chestnut Run Energy facility in Carroll County, which is owned by an affiliate of infrastructure investor ArcLight Capital.
One gigawatt can generally power about 800,000, meaning the Trump-backed project would be able to supply about 7.4 million homes, if it operated at full capacity.
Still, the facility could exacerbate uncertainty for PJM as well as developers contending with the demand surge, coming as the grid operator makes changes to boost reliability and secure needed supplies, one of the industry representatives said.
Power developers are already confronting other challenges getting gas plants online, including navigating supply chain bottlenecks that are delaying the availability of critical components, transmission constraints and long waits to get connected to grids.
PJM is home to the largest concentration of data centers in the country. There are new questions about how many proposed projects will show up amid significant policy changes, which could force developers to build these data campuses and power plants in regulated states in the Southeast or other parts of the Midwest, said Morningstar analyst Travis Miller.
Electricity markets are notoriously volatile and for independent generators “there is just way too much uncertainty right now to guarantee a rate of return for investors over 20 or 30 years,” Miller said.
PJM is simultaneously facing the potential for unprecedented demand growth as well as questions about how many of those data centers actually will show up — let alone thrive long enough to pay their share of investment upgrades.
Its grid is facing a supply shortage as soon as next year after a PJM auction to procure generating capacity fell short by more than 6 gigawatts. But the size and speed of the potential strain have been tough to estimate. Less than a month after that failed auction, PJM issued a new forecast cutting its anticipated shortfall by about half, only to last week estimate it could actually explode tenfold over the next decade.
The promise of new electricity demand could be enough to keep other potential power projects on track, even with a 9.2-gigawatt competitor on the horizon, Fox said. According to ClearView’s calculations, even if the plant generally churns out 60% of its total production capacity, it would supply only about a fifth of the region’s projected power demand growth through 2030.
“In this beg-a-watt environment where there’s just so much demand for capacity, we would not be surprised if other developers determined that even with such a large new player on the field the growing pie gives them enough reason to move forward,” Fox said.
— With assistance from Julian Hast
(Updates with more detail on other obstacles to development in 15th paragraph)
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