Bank of America analysts project datacenter power demand will outpace planned US utility capacity additions by >100 GW through 2030, forcing on-site generation.
Bank of America analysts project that data center demand will outpace planned utility capacity additions by more than 100 GW through 2030, increasing reliance on on-site gas generation and battery storage.
The report's forecast comes largely from BofA's semiconductor analysts, whose projections for rapid deployment of AI computing infrastructure—including specialized chips and servers—underpin the firm's outlook for a widening U.S. electricity supply gap. The analysts note that utilities have revised demand forecasts upward in each of the past three years as AI-related electricity demand has materialized faster than expected.
As utilities struggle to bring new capacity online quickly enough, BofA expects more data center developers to turn to behind-the-meter generation. More than 7.5 GW of data center projects with on-site generation are already under construction, with another 60 GW-plus in pre-construction. Rather than operating entirely off-grid, these facilities are expected to combine self-generation with traditional grid connections to improve reliability and shorten project timelines.
AI infrastructure is reshaping long-term electricity demand after a decade of largely flat consumption growth driven by efficiency improvements, LED adoption, and distributed solar generation. The analysts noted that planned generation additions may overstate available supply because intermittent resources such as wind and solar contribute less accredited capacity during peak demand than their nameplate ratings suggest. Firm resources will remain essential even as renewable generation expands.
Natural gas is expected to play a central role in meeting new demand, but equipment availability is a constraint. Large gas turbines remain the preferred technology for flexible power, yet manufacturing capacity is largely committed through 2030 and new units can take years to enter service after shipment. This has increased interest in natural gas reciprocating engines, which can be deployed more quickly and respond rapidly to changing loads. Manufacturers including Caterpillar, INNIO, Rolls-Royce, and Wärtsilä have expanded production to meet rising demand.
Utilities and regulators are increasingly keeping existing generating assets online longer to preserve reliability. Coal plants across Maryland, Wisconsin, Indiana, Utah, Kansas, Nebraska, and Mississippi have had retirement dates delayed or canceled to preserve dispatchable capacity.
Battery storage, transmission expansion, and regulatory changes that increase utilization of existing generating assets could also help address reliability challenges, though transmission projects often take years to permit and build. The Champlain Hudson Power Express, which took 16 years from planning to energization, exemplifies the development timelines facing new infrastructure.
The concentration of AI-driven data center growth in the U.S. is prompting utilities and regulators to address how to connect large new loads and allocate the cost of new infrastructure. Higher power prices could drive some demand destruction among customers and energy-intensive industries, but academic research suggests electricity demand is relatively inelastic in the short to medium term—a 10% increase in real electricity prices typically results in a 1% to 2% decline in consumption.
"The market is no longer constrained by demand — it is constrained by where power can actually be delivered," BofA analysts wrote in their Global Research Report.