AI boom may slow U.S. clean grid ambitions due to massive electricity consumption by datacenters.
Data centers powering artificial intelligence and related technologies are experiencing explosive growth that is straining electrical utilities and grid infrastructure across the United States. Some utilities in the eastern and southern parts of the U.S. are proposing new natural gas-fired capacity alongside renewables to support this demand, while others have delayed the timeline for retiring coal-fired capacity to ensure grid reliability. Many tech companies prioritize clean energy for their data centers, but utilities cannot connect new solar and wind power to the grid fast enough to enable timely data center operations. Grid Strategies founder Rob Gramlich warned Bloomberg that the ultimate concern is that "we'll be short on power," noting that the U.S. needs at least $20 billion in annual investments in long-distance transmission lines, even though current spending is basically zero.
Grid Strategies' analysis of utilities' regulatory filings found that grid planners nearly doubled their 5-year load growth forecast over the past year, with the key drivers being investments in new manufacturing, industrial, and data center facilities. According to the report, "The U.S. electric grid is not prepared for significant load growth," and utilities have noted a recent "surge in data center and industrial development caused sudden, shockingly large increases in 5-year load growth expectations." Dominion Energy, which serves Virginia's Eastern Loudoun County—dubbed Data Center Alley and the world's "largest data center market"—identified key growth drivers including "migration to the cloud as companies outsource information technology functions, smartphone technology and apps, 5G technology, digitization of data, and artificial intelligence." In its 2023 integrated resource plan, Dominion Energy Virginia outlined up to 9 gigawatts of new natural gas-fired capacity by 2048 due to reliability concerns.
Utilities across the country are adjusting their infrastructure plans in response to data center demand. Kansas City-based Evergy delayed the retirement of coal operations at its Lawrence Energy Center from end-2023 to 2028, with CEO David Campbell explaining that "Our service area is experiencing some of its most robust electricity demand growth in decades, including very large projects like the Panasonic electric vehicle battery manufacturing factory and the Meta datacenter, as well as broad-based economic development in both Kansas and Missouri." NextEra Energy Resources president and CEO Rebecca Kujawa stated that "Clearly, there's an enormous amount of demand being driven across the U.S. economy by the growth in data centers, driven by a lot of things, of course, but specifically generative AI," adding that "that growth is pretty explosive at this point."
The scale of data center electricity demand is staggering. Boston Consulting Group found that data center electricity consumption accounted for 2.5 percent of the U.S. total (approximately 130 TWh) in 2022 and is expected to triple to 7.5 percent (approximately 390 TWh) by 2030—equivalent to the electricity used by about 40 million U.S. houses, almost a third of the total homes in the U.S. Globally, the International Energy Agency reported in its Electricity 2024 report that electricity consumption from data centers, artificial intelligence, and the cryptocurrency sector could double by 2026. After consuming an estimated 460 terawatt-hours globally in 2022, electricity consumption from data centers could reach more than 1,000 TWh in 2026, roughly equivalent to Japan's total electricity consumption. Depending on deployment pace and AI and cryptocurrency trends, the additional electricity consumption in 2026 compared to 2022 would be roughly equivalent to adding at least one Sweden or at most one Germany to global demand.