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Released April 16, 2024 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Construction of data centers in the U.S. has been growing strongly in recent years, and the growth will escalate even further for the next few years, which is helping drive up electricity demand and capital expenditures (Capex) at electric utilities across the country.
This year, about 289 data center projects are scheduled to begin construction across the U.S., according to Industrial Info's Global Marketing Intelligence (GMI) platform. The total investment value (TIV) of those projects is approximately $75 billion. In 2025, companies plan to begin construction on about 210 data centers domestically, at a cost of roughly $101 billion. By contrast, only 13 data centers were constructed in the U.S. in 2017, and 26 were built in 2019.
Click on the image at right to see a chart of completed and proposed data center projects in the U.S. from 2017 to 2026.
Subscribers to Industrial Info's GMI platform can click here for a list of detailed reports on U.S. data center projects with kickoffs from 2024 to 2026.
The states with the greatest dollar value of data center project activity are Virginia, Arizona, Texas, Georgia and Ohio. Over a dozen proposed projects have a TIV of $1 billion or more.
Click on the image at right to see the 10 states with the greatest dollar value of planned data center construction projects.
Industrial Info does not expect all of these planned projects will begin construction according to their current schedules. Some projects will get delayed and others will be added, but we expect few will be cancelled outright. Overall, it seems clear that data centers will be one of the fastest-growing customer segments for electric utilities over the next few years.
"Data centers" is an umbrella term that includes buildings or campuses housing hundreds, thousands or even tens of thousands of computer servers that are used for everything from artificial intelligence to cryptocurrency mining, data security, corporate resiliency and supply-chain management.
Thousands of organizations have digitized at least some aspects of their operations in recent years, necessitating third-party data storage, but many are in the early stage of their digital journey. Most of the new electric load created by these data centers will come from cooling demand, to offset the heat generated by the servers, and electricity to power the servers themselves.
For more on the growth of data centers, see April 3, 2024, article - ISM: U.S. Manufacturing Activity Expands for First Time Since 2022; March 19, 2024, article - Google Signs PPA with Salt River Project to Support Upcoming Arizona Data Center; and February 12, 2024, article - Ohio Sees $59 Billion in Industrial Manufacturing Projects.
The U.S. Energy Information Administration (EIA), the statistical and analytical branch of the U.S. Department of Energy (DOE), is in the process of determining just how much electricity is being used by data centers. In a preliminary report earlier this year, the agency said electricity use by cryptocurrency mining operations alone, a subset of data centers, has grown very rapidly in recent years, accounting for between 0.6% and 2.3% of the nation's electricity use.
Recent news reports have said the surge of data centers is causing some of the largest U.S. electric utilities to revise their growth plans, and Capex programs, to accommodate sharply rising electric demand. Traditionally, electric demand grows an average of about 1% per year for most electric utilities, though annual load growth can briefly surge to 3% or more after recessions.
Nine of the largest 10 U.S. electric utilities said data centers were a main source of customer growth, leading many to revise up capital expenditure plans and demand forecasts, according to a Reuters analysis of company earnings reports.
During the same earnings period last year, only two of the companies mentioned data centers, the news service said.
Southern Company (NYSE:SO) (Atlanta, Georgia), which operates three electric utilities in the Southeast, expects data centers to propel its electricity sales growth to 6% each year from 2025 to 2028, up from predicted annual growth of 1% to 2%. Southern's largest subsidiary, Georgia Power Company (Atlanta), is expecting an unprecedented 9% increase in annual electric demand, Reuters said.
Executives at other large electricity providers, including Florida Power & Light (Juno Beach, Florida), a unit of NextEra Energy Incorporated (NYSE:NEE) (Juno Beach), American Electric Power Company (NYSE:AEP) (Columbus, Ohio), and Dominion Energy Incorporated (NYSE:D) (Richmond, Virginia), have reported a surge in demand tied to data centers.
In a speech delivered at an oil and gas conference in Texas in February, Texas Governor Greg Abbott (R-Texas) reportedly said the Lone Star State's electricity supply must increase by up to 10% to 15% per year over the next few years to keep up with projected demand growth coming from data centers, residential housing and oil and gas operations.
In a research report, investment bank Morgan Stanley (NYSE:MS) (New York, New York) predicted worldwide data center power use will triple this year, to about 46 terawatt-hours (TWh) this year from less than 15 TWh in 2023.
As rapidly as some companies expect data centers, and electric demand, to grow, others have said those growth projections, as dramatic as they are, still are too low.
The world is "grossly" underestimating how much the demand for artificial intelligence is going to expand the global market for data centers over the next five years, according to the co-founder of the cloud-computing company CoreWeave (Roseland, New Jersey).
Speaking this month at a Bloomberg conference in New York, Brian Venturo, co-founder and chief strategy officer at CoreWeave, said: "The market is moving a lot faster than supply chains that have historically supported a very physical business..." He predicted the rise of data center "megacampuses" will stress power grids and spur political fights.
Venturo said the data center requests that CoreWeave is receiving on a daily basis "are absurd," with many asking for entire campuses for themselves, according to a news report in Bloomberg.
David Pickering, Industrial Info's vice president of research for the Industrial Manufacturing Industry, said, "The drive to digitize has been transforming businesses for years, and we have said that trend would lead to strong growth in data centers. But some of these recent predictions truly boggle the mind. If the more aggressive predictions come to pass, the spillover effects will reshape the global economy."
Rising electricity demand created by data centers is placing added stress on electric utilities executives as they try to decarbonize their electricity supply while maintaining high electric reliability, keeping prices affordable and preparing for a future with more electric transportation.
"It's sometimes said that all growth is good, but that's not the case if electric demand surges by a factor of three or four or five in a short period," said Britt Burt, Industrial Info's vice president of research for the Electric Power Industry. Because of that, not all proposed data centers will take grid-supplied power from their local electric utility, he predicted. As attractive as electric load from data centers may be, the upfront capital costs to serve that load may be too much for some utilities. "Some data centers have chosen to build onsite generation, either for emergency back-up power or as the main source of power," he noted.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
This year, about 289 data center projects are scheduled to begin construction across the U.S., according to Industrial Info's Global Marketing Intelligence (GMI) platform. The total investment value (TIV) of those projects is approximately $75 billion. In 2025, companies plan to begin construction on about 210 data centers domestically, at a cost of roughly $101 billion. By contrast, only 13 data centers were constructed in the U.S. in 2017, and 26 were built in 2019.
Subscribers to Industrial Info's GMI platform can click here for a list of detailed reports on U.S. data center projects with kickoffs from 2024 to 2026.
The states with the greatest dollar value of data center project activity are Virginia, Arizona, Texas, Georgia and Ohio. Over a dozen proposed projects have a TIV of $1 billion or more.
Industrial Info does not expect all of these planned projects will begin construction according to their current schedules. Some projects will get delayed and others will be added, but we expect few will be cancelled outright. Overall, it seems clear that data centers will be one of the fastest-growing customer segments for electric utilities over the next few years.
"Data centers" is an umbrella term that includes buildings or campuses housing hundreds, thousands or even tens of thousands of computer servers that are used for everything from artificial intelligence to cryptocurrency mining, data security, corporate resiliency and supply-chain management.
Thousands of organizations have digitized at least some aspects of their operations in recent years, necessitating third-party data storage, but many are in the early stage of their digital journey. Most of the new electric load created by these data centers will come from cooling demand, to offset the heat generated by the servers, and electricity to power the servers themselves.
For more on the growth of data centers, see April 3, 2024, article - ISM: U.S. Manufacturing Activity Expands for First Time Since 2022; March 19, 2024, article - Google Signs PPA with Salt River Project to Support Upcoming Arizona Data Center; and February 12, 2024, article - Ohio Sees $59 Billion in Industrial Manufacturing Projects.
The U.S. Energy Information Administration (EIA), the statistical and analytical branch of the U.S. Department of Energy (DOE), is in the process of determining just how much electricity is being used by data centers. In a preliminary report earlier this year, the agency said electricity use by cryptocurrency mining operations alone, a subset of data centers, has grown very rapidly in recent years, accounting for between 0.6% and 2.3% of the nation's electricity use.
Recent news reports have said the surge of data centers is causing some of the largest U.S. electric utilities to revise their growth plans, and Capex programs, to accommodate sharply rising electric demand. Traditionally, electric demand grows an average of about 1% per year for most electric utilities, though annual load growth can briefly surge to 3% or more after recessions.
Nine of the largest 10 U.S. electric utilities said data centers were a main source of customer growth, leading many to revise up capital expenditure plans and demand forecasts, according to a Reuters analysis of company earnings reports.
During the same earnings period last year, only two of the companies mentioned data centers, the news service said.
Southern Company (NYSE:SO) (Atlanta, Georgia), which operates three electric utilities in the Southeast, expects data centers to propel its electricity sales growth to 6% each year from 2025 to 2028, up from predicted annual growth of 1% to 2%. Southern's largest subsidiary, Georgia Power Company (Atlanta), is expecting an unprecedented 9% increase in annual electric demand, Reuters said.
Executives at other large electricity providers, including Florida Power & Light (Juno Beach, Florida), a unit of NextEra Energy Incorporated (NYSE:NEE) (Juno Beach), American Electric Power Company (NYSE:AEP) (Columbus, Ohio), and Dominion Energy Incorporated (NYSE:D) (Richmond, Virginia), have reported a surge in demand tied to data centers.
In a speech delivered at an oil and gas conference in Texas in February, Texas Governor Greg Abbott (R-Texas) reportedly said the Lone Star State's electricity supply must increase by up to 10% to 15% per year over the next few years to keep up with projected demand growth coming from data centers, residential housing and oil and gas operations.
In a research report, investment bank Morgan Stanley (NYSE:MS) (New York, New York) predicted worldwide data center power use will triple this year, to about 46 terawatt-hours (TWh) this year from less than 15 TWh in 2023.
As rapidly as some companies expect data centers, and electric demand, to grow, others have said those growth projections, as dramatic as they are, still are too low.
The world is "grossly" underestimating how much the demand for artificial intelligence is going to expand the global market for data centers over the next five years, according to the co-founder of the cloud-computing company CoreWeave (Roseland, New Jersey).
Speaking this month at a Bloomberg conference in New York, Brian Venturo, co-founder and chief strategy officer at CoreWeave, said: "The market is moving a lot faster than supply chains that have historically supported a very physical business..." He predicted the rise of data center "megacampuses" will stress power grids and spur political fights.
Venturo said the data center requests that CoreWeave is receiving on a daily basis "are absurd," with many asking for entire campuses for themselves, according to a news report in Bloomberg.
David Pickering, Industrial Info's vice president of research for the Industrial Manufacturing Industry, said, "The drive to digitize has been transforming businesses for years, and we have said that trend would lead to strong growth in data centers. But some of these recent predictions truly boggle the mind. If the more aggressive predictions come to pass, the spillover effects will reshape the global economy."
Rising electricity demand created by data centers is placing added stress on electric utilities executives as they try to decarbonize their electricity supply while maintaining high electric reliability, keeping prices affordable and preparing for a future with more electric transportation.
"It's sometimes said that all growth is good, but that's not the case if electric demand surges by a factor of three or four or five in a short period," said Britt Burt, Industrial Info's vice president of research for the Electric Power Industry. Because of that, not all proposed data centers will take grid-supplied power from their local electric utility, he predicted. As attractive as electric load from data centers may be, the upfront capital costs to serve that load may be too much for some utilities. "Some data centers have chosen to build onsite generation, either for emergency back-up power or as the main source of power," he noted.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
