US utility company NextEra Energy has obtained approval to develop up to 10GW of natural gas power generation capacity in Texas and Pennsylvania to meet surging data center demand in both states.

The new gas-fired generation was approved by the US Government in connection with Japan's recent $550 billion commitment to the US market. The projects will be jointly owned by both Japan and the US under the structure of the joint trade agreement. NextEra would build and operate the plants. According to the companies, the investment package is subject to negotiation and execution of definitive documents by NextEra and various constituents, as well as NextEra's completion of development, construction, and commissioning of the selected projects.

The projects include the 4.3GW Southwest Pennsylvania Natural Gas Generation Facility, which is expected to cost an estimated $17 billion and deliver power into the PJM Interconnection market, and the 5.2GW Texas Natural Gas Generation Facility (Project Anderson) in Anderson County, Texas, which is expected to cost an estimated $16bn and deliver power into the ERCOT market.

"Our hub strategy is designed to scale quickly and support rising demand while strengthening America's energy security – without increasing electricity costs for American households. We are pleased that our Texas and Pennsylvania hubs have been selected to advance the President's goal of American energy dominance," said John Ketchum, chairman, president, and CEO of NextEra Energy.

The projects are based on NextEra’s hub strategy, which involves developing large-scale energy hubs to reduce development timelines and execution risk. According to the company, it has around 30 hubs at various stages of development and is working toward a target of approximately 40.

The Japanese-US deal will also see investment in small modular reactors located in Tennessee and Alabama. The SMRs will have a capacity of 3GW and will be developed by GE Vernova Hitachi. The units are expected to cost an estimated $40bn.

Earlier this year, NextEra revealed that it had 20GW of interest from large load users, mainly from hyperscale customers. The company also revealed that it is targeting 15GW of new generation for data center hubs by 2035 through the "15 by 35" origination channel, with current discussions covering 20 hubs. NextEra management said it expects this figure to double to 40 by the end of the year.

In addition to supplying data centers through the grid, the company has signed several exclusive agreements with data center providers to supply them with energy.

At the end of last year, NextEra expanded a partnership with Google Cloud to develop several gigawatt-scale data center campuses and the associated generation and capacity needed to power them. The deal builds on an established partnership between the two companies, with more than 3.5GW of power in operation or under contract. In October, the two companies signed a 25-year Power Purchase Agreement to support the restart of the 615MW Duane Arnold Energy Center in Palo, Iowa.

Last year, the company also signed 2.5GW of clean energy contracts with Meta across the US, covering 11 Power Purchase Agreements (PPA) and two Energy Storage Agreements (ESA).