Over the past year, the biggest story in the U.S. power sector has been the massive and looming increase in demand for electricity, most of it driven by data centers that companies like Amazon, Google, Meta, and Microsoft are planning to build to serve their gigantic AI ambitions.
This scramble for electricity has complicated efforts to decarbonize the U.S. power grid, which accounts for about one-quarter of the country’s carbon dioxide emissions. Facing the sudden prospect of huge new demand from data centers, utilities around the country are planning to build new fossil-gas power plants and keep coal plants online for longer, actions that experts fear will undermine various emissions targets.
A new report from consultancy Grid Strategies suggests that hunger for electricity will only accelerate, putting even more strain on these decarbonization goals — as well as on U.S. utilities and the ratepayers who end up paying for the power plants and grid infrastructure needed to support data-center growth.
Late last year, Grid Strategies was one of the first to note that U.S. electricity demand was set to boom beyond expectations over the next five years.
Fast-forward 12 months and things have only gotten crazier, according to its latest analysis. Federal data shows that five-year electricity demand forecasts have more than tripled in recent years. In 2022, the projection for five years out was 23 gigawatts of new load. By late 2023, that grew to 39 GW. Now, utilities are forecasting 67 GW of new load over the next five years.
But that federal data doesn’t show the whole picture. Taking into account recent updates from Georgia, Texas, Virginia, and other data-center hot spots, the country’s five-year load-growth forecast has increased almost fivefold in the past two years, to nearly 128 GW.
The U.S. hasn’t seen that kind of load growth since the 1980s, back when the U.S. economy and the power sector were much smaller, and climate change wasn’t yet a recognized threat requiring the rapid-fire replacement of fossil-fueled power plants with solar, wind, and other sources of carbon-free power.
All these factors make the challenge of expanding the U.S. grid and power supply to serve future needs much greater today, John Wilson, vice president at Grid Strategies, said in a Thursday press conference.
And while sectors such as manufacturing, electric vehicles, and electrification of building heating are also adding demand in the longer term, “data centers have stepped to the forefront,” he said.
This rapid demand growth is not spread evenly across the country. “Most of the load growth is occurring in the Dallas–Fort Worth region, in the Northern Virginia region, and in the Atlanta region,” Wilson said — regions where data-center developers are seeking gigawatts of power for projects they hope to build as quickly as possible.
Grid Strategies’ new report caps what has been a hectic and seemingly nonstop year of data-center planning and development, driven largely by big tech firms’ desire to outmuscle one another on generative AI.
In Northern Virginia’s “Data Center Alley,” the world’s largest concentration of data centers could nearly quadruple its power demand from about 4 GW today to 15 GW by 2030, according to Aurora Energy Research. That could equate to half of Virginia’s total electricity load, the nonprofit research organization Electric Power Research Institute says.
In Texas, forecasts indicate that data centers could be responsible for roughly half of new power demand, which is expected to drive summer grid peaks from about 86 GW today to about 150 GW in 2030. In November, Oncor, the utility serving the Dallas–Fort Worth area, reported 103 GW of potential load — or demand — seeking to connect to its system, with artificial intelligence and data centers making up about 82 GW of that, up from 59 GW of data centers as of August.
And Georgia Power, the state’s biggest utility, last month reported that its load forecast over the coming decade has tripled from 12 GW as of last year to 36.5 GW today, with large loads including data centers making up 34.6 GW of that expected demand.
This massive hunger for computing power raises several important questions, Wilson said. The first is how utilities and regulators can guard against the risk of developing power plants and grid infrastructure to support data centers that might not actually get built.
