Data centers drive up projected electricity growth in the U.S.
Data DiveIn just two years, the growth of data centers — fueled in part by artificial intelligence’s rapid integration into our livelihoods — have dramatically reshaped expectations for future energy consumption in the United States.
Power utilities projected in 2024 that electricity demand would grow five times faster over the next five years compared to forecasts made two years ago: from 23 gigawatts of projected growth to over 128 gigawatts.
That’s according to data utilities have submitted to the federal electricity regulator, the Federal Energy Regulatory Commission (FERC), and preliminary updated forecasts some utilities have published and which Grid Strategies, a Washington, DC-based electricity market consulting firm, has analyzed.
This kind of projected jump in electricity growth is largely unprecedented in recent decades. “I have not seen this degree of change in a forecast in my career, and no one has seen these nationwide growth levels since the 1980s,” Rob Gramlich, founder and president of Grid Strategies, told Cipher. Building the energy infrastructure to meet this demand will require cooperation between utilities, regulators and the federal government, Gramlich said.
More than half of the forecasted growth in electricity demand is expected to come from data centers, according to Grid Strategies.
The race to develop more advanced artificial intelligence, powered by energy-hungry data centers, has put tech giants like Meta, Amazon, Google and Microsoft, all of which also have corporate sustainability goals, in a headlong dash to secure sources of low-carbon electricity.
The nuclear industry has benefitted handsomely from this new and voracious demand for clean, always-on power, with major tech companies inking deals with new nuclear startups and legacy plants last year.
Other sectors of the power market are looking to cash in as well: Exxon Mobil is developing a natural gas power plant with carbon capture technology and Google announced a plan to co-locate up to $20 billion worth of renewable power and energy storage.
Building more transmission lines — the wires that carry electricity — will be crucially important to bring more power online. In the U.S., building new lines is often a tedious and lengthy bureaucratic process. A legislative effort to expedite it was scuttled at the end of last year because lawmakers could not agree on terms.
“The failure of permitting reform in Congress … just made things harder than they could have been,” Gramlich told Cipher.