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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The rapid growth of energy-gobbling data centers has challenged the U.S. electricity industry in recent years, and the challenges likely will escalate, potentially sharply, for the remainder of this decade, according to a new report from the Electric Power Research Institute (EPRI) (Palo Alto, California).
The research group's new report, "Powering Intelligence: Analyzing Artificial Intelligence and Data Center Energy Consumption," said data centers "are one of the fastest growing industries worldwide. Between 2017 and 2021, electricity used by Meta, Amazon, Microsoft and Google--the main providers of commercially available cloud computing and digital services--more than doubled." The report was released May 29.
Today, about 4% of all electricity produced in the U.S. is consumed by data centers, the report said, and that could more than double, to about 9%, by 2030 in one of the four scenarios EPRI explored.
EPRI, the electricity industry's leading technical research organization, created four scenarios--low, moderate, high and higher growth--to gauge the percentage of electricity that would be consumed by data centers by 2030. In the "low" case, data centers would use slightly under 5% of all domestically generated electricity by 2030. At the "higher growth" case, data centers would consume slightly over 9% of all electricity generated across the country.
The compound annual growth rate for electricity demand in the low-growth case would be 3.7%, more than triple the typical annual 1% demand growth for the electricity industry. At the highest growth scenario, data center's electricity use would grow 15% annually for the remainer of this decade.
Click on the image at right to see EPRI's four demand growth scenarios for data centers.
The report noted that this was a national growth projection. But data centers are not evenly distributed across the U.S. Instead, as the report noted, data centers have been located in areas "where internet connections are strong; where electricity prices, land costs and disruptive events are low; where skilled labor is available; near population centers and users; and where the centers can develop backup power to ensure power supply (usually natural gas or diesel generators)." An additional influencing factor is the degree to which data centers have corporate-level commitments to clean electricity.
Those requirements have led to a concentration of data centers in about 15 states that check all of those boxes. Those 15 states accounted for about 80% of the national data center load in 2023. In Virginia alone, about 25% of the electricity consumed in that state in 2023 went to data centers.
Following Virginia, these are the other states with significant data center electric demand in 2023 as a percentage of all electricity delivered within that state's boundaries: Texas, California, Illinois, Oregon, Arizona, Iowa, Georgia, Washington, Pennsylvania, New York, New Jersey, Nebraska, North Dakota and Nevada. EPRI then projected data center electric demand in 2030. In some of those states, such as Virginia and North Dakota, data centers are projected to consume 20% or more of the electricity delivered. Most of the other "high growth" will send between 10% and 20% of their electricity to data centers by then.
Click on the image at right to see a U.S. map showing which states could have the highest percentage of electricity consumed by data centers in 2030.
This projected surge in electric demand growth comes as utilities continue to close older, less-efficient and higher-polluting power plants as part of the state and federal government's effort to decarbonize the production of electricity. Companies in the power business also are planning significant investments to expand and upgrade the nation's transmission and distribution (T&D) grid. The growing electrification of transportation is another strategic trend facing electric utilities.
The new EPRI report joins a growing body of research into the rising electric demand growth created by data centers and how utilities are increasing their capital spending plans to meet electric demands of that sector. For more on this, see: May 29, 2024, article - Data Center Sector Leads Iowa's $6.4 Billion of Projects Under Construction; May 16, 2024, article - AEP Asks Ohio for Pay Commitments as Influx of Data Centers Squeezes T&D Infrastructure; April 25, 2024, article - Data Centers, Oil & Gas Industry to Drive Surge in Texas Electricity Demand; April 23, 2024, article - Data Center Activity Propels Virginia to $12.7 Billion of Projects Under Construction; and April 16, 2024, article - Data Center Construction Propels Electric Load Growth and Utility Capex.
This year, at least 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 more than $75 billion. In 2025, companies plan to begin construction on at least 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 U.S. electricity sector is working hard to meet the growing demands of data centers, transportation electrification, crypto-mining, and industrial onshoring, while balancing decarbonization efforts," David Porter, EPRI's vice president of electrification and sustainable energy strategy, said in a statement accompanying the new report. "The data center boom requires closer collaboration between large data center owners and developers, utilities, government, and other stakeholders to ensure that we can power the needs of AI while maintaining reliable, affordable power to all customers."
One of the forces driving the dramatic growth in data centers is the explosive popularity of generative artificial intelligence-fueled chatbots such as ChatGPT, Google Bard and Microsoft Copilot. "Artificial intelligence (AI) models are typically much more energy-intensive than the data retrieval, streaming and communications applications that drove data center growth over the past two decades," the EPRI report noted. "At 2.9 watt-hours per ChatGPT request, AI queries are estimated to require 10x the electricity of traditional Google queries, which use about 0.3 watt-hours each; and emerging, computation-intensive capabilities such as image, audio, and video generation have no precedent."
In the 20th century, the report noted, "AI applications typically involved rule-based strategies and small machine learning models that used very little electricity. However, as the 21st century unfolded, AI systems witnessed exponential growth in their complexity and computational requirements."
The "Powering Intelligence" reports continued: "With the shift to cloud computing and AI, new data centers are growing in size. It is not unusual to see new centers being built with (electric demand) from 100 MW to 1,000 MW--roughly equivalent to the (electric) load from 80,000 to 800,000 homes. Connection lead times of one to two years, demands for highly reliable power, and requests for power from new, non-emitting generation sources can create local and regional electric supply challenges."
Rather than trying to tamp down electric demand growth by convincing people to stop using AI chatbots, EPRI has three recommendations for keeping the servers humming and the lights burning:
The research group's new report, "Powering Intelligence: Analyzing Artificial Intelligence and Data Center Energy Consumption," said data centers "are one of the fastest growing industries worldwide. Between 2017 and 2021, electricity used by Meta, Amazon, Microsoft and Google--the main providers of commercially available cloud computing and digital services--more than doubled." The report was released May 29.
Today, about 4% of all electricity produced in the U.S. is consumed by data centers, the report said, and that could more than double, to about 9%, by 2030 in one of the four scenarios EPRI explored.
EPRI, the electricity industry's leading technical research organization, created four scenarios--low, moderate, high and higher growth--to gauge the percentage of electricity that would be consumed by data centers by 2030. In the "low" case, data centers would use slightly under 5% of all domestically generated electricity by 2030. At the "higher growth" case, data centers would consume slightly over 9% of all electricity generated across the country.
The compound annual growth rate for electricity demand in the low-growth case would be 3.7%, more than triple the typical annual 1% demand growth for the electricity industry. At the highest growth scenario, data center's electricity use would grow 15% annually for the remainer of this decade.
The report noted that this was a national growth projection. But data centers are not evenly distributed across the U.S. Instead, as the report noted, data centers have been located in areas "where internet connections are strong; where electricity prices, land costs and disruptive events are low; where skilled labor is available; near population centers and users; and where the centers can develop backup power to ensure power supply (usually natural gas or diesel generators)." An additional influencing factor is the degree to which data centers have corporate-level commitments to clean electricity.
Those requirements have led to a concentration of data centers in about 15 states that check all of those boxes. Those 15 states accounted for about 80% of the national data center load in 2023. In Virginia alone, about 25% of the electricity consumed in that state in 2023 went to data centers.
Following Virginia, these are the other states with significant data center electric demand in 2023 as a percentage of all electricity delivered within that state's boundaries: Texas, California, Illinois, Oregon, Arizona, Iowa, Georgia, Washington, Pennsylvania, New York, New Jersey, Nebraska, North Dakota and Nevada. EPRI then projected data center electric demand in 2030. In some of those states, such as Virginia and North Dakota, data centers are projected to consume 20% or more of the electricity delivered. Most of the other "high growth" will send between 10% and 20% of their electricity to data centers by then.
This projected surge in electric demand growth comes as utilities continue to close older, less-efficient and higher-polluting power plants as part of the state and federal government's effort to decarbonize the production of electricity. Companies in the power business also are planning significant investments to expand and upgrade the nation's transmission and distribution (T&D) grid. The growing electrification of transportation is another strategic trend facing electric utilities.
The new EPRI report joins a growing body of research into the rising electric demand growth created by data centers and how utilities are increasing their capital spending plans to meet electric demands of that sector. For more on this, see: May 29, 2024, article - Data Center Sector Leads Iowa's $6.4 Billion of Projects Under Construction; May 16, 2024, article - AEP Asks Ohio for Pay Commitments as Influx of Data Centers Squeezes T&D Infrastructure; April 25, 2024, article - Data Centers, Oil & Gas Industry to Drive Surge in Texas Electricity Demand; April 23, 2024, article - Data Center Activity Propels Virginia to $12.7 Billion of Projects Under Construction; and April 16, 2024, article - Data Center Construction Propels Electric Load Growth and Utility Capex.
This year, at least 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 more than $75 billion. In 2025, companies plan to begin construction on at least 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 U.S. electricity sector is working hard to meet the growing demands of data centers, transportation electrification, crypto-mining, and industrial onshoring, while balancing decarbonization efforts," David Porter, EPRI's vice president of electrification and sustainable energy strategy, said in a statement accompanying the new report. "The data center boom requires closer collaboration between large data center owners and developers, utilities, government, and other stakeholders to ensure that we can power the needs of AI while maintaining reliable, affordable power to all customers."
One of the forces driving the dramatic growth in data centers is the explosive popularity of generative artificial intelligence-fueled chatbots such as ChatGPT, Google Bard and Microsoft Copilot. "Artificial intelligence (AI) models are typically much more energy-intensive than the data retrieval, streaming and communications applications that drove data center growth over the past two decades," the EPRI report noted. "At 2.9 watt-hours per ChatGPT request, AI queries are estimated to require 10x the electricity of traditional Google queries, which use about 0.3 watt-hours each; and emerging, computation-intensive capabilities such as image, audio, and video generation have no precedent."
In the 20th century, the report noted, "AI applications typically involved rule-based strategies and small machine learning models that used very little electricity. However, as the 21st century unfolded, AI systems witnessed exponential growth in their complexity and computational requirements."
The "Powering Intelligence" reports continued: "With the shift to cloud computing and AI, new data centers are growing in size. It is not unusual to see new centers being built with (electric demand) from 100 MW to 1,000 MW--roughly equivalent to the (electric) load from 80,000 to 800,000 homes. Connection lead times of one to two years, demands for highly reliable power, and requests for power from new, non-emitting generation sources can create local and regional electric supply challenges."
Rather than trying to tamp down electric demand growth by convincing people to stop using AI chatbots, EPRI has three recommendations for keeping the servers humming and the lights burning:
- Increase the energy efficiency and flexibility of data centers
- Better coordination between data center developers and electric companies regarding data center power needs, timing, and flexibility, as well as electric supplies and delivery constraints, and
- Improve electric utility modeling tools to better plan the 5-10+ year grid investments needed to anticipate and accommodate data center growth without negatively impacting other customers and to identify strategies for maintaining grid reliability with these large, novel demands.
