The surge is expected to push Dominion Energy’s peak demand up by 50% over the next six years—equivalent to adding New Jersey’s total power demand to Virginia over the next 15 years. The Paris-based energy policy advisory group said that “artificial intelligence has the potential to transform the energy sector in the coming decade, driving a surge in electricity demand from data centers worldwide, while also unlocking significant opportunities to cut costs, enhance competitiveness, and reduce emissions”. As data centers contribute to a growing need for power, the electric grid will require significant investment. Goldman Sachs Research estimates that about $720 billion of grid spending through 2030 may be needed. “These transmission projects can take several years to permit, and then several more to build, creating another potential bottleneck for data center growth if the regions are not proactive about this given the lead time,” Schneider says.
- Still, several questions remain about DeepSeek’s training, infrastructure, and ability to scale.
- Right now, coal provides about 30 percent of the energy needed to power data centres, but renewables and natural gas will increase their shares because of their lower costs and wider availability in key markets.
- Meeting this rapid load growth will require 10 to 15 GW of firm generation capacity, but challenges like low market prices, transmission constraints, and infrastructure delays could hinder progress, Aurora suggests.
Khan added that other factors also pose challenges for resource adequacy and planning, including the anticipated retirement of aging generation assets and the growing penetration of electric vehicles (EVs), which are expected to account for 11% of total PJM load by 2039. accrual vs provision The International Energy Agency (IEA) also echoes expectations of rapid growth but emphasizes that data center electricity demand will remain a relatively small share of total global demand through 2030. Supply chain bottlenecks, particularly for AI chips and advanced cooling technologies, could slow the pace of growth. Additionally, delays in developing local grids and adding new power generation capacity contribute to the uncertainty. Meeting this rapid load growth will require 10 to 15 GW of firm generation capacity, but challenges like low market prices, transmission constraints, and infrastructure delays could hinder progress, Aurora suggests.
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- Globally, data center demand hovered at 340 TWh in 2023—about 1.3% of worldwide electricity use.
- The International Data Corp. in September 2024 that total electricity consumption by data centers will more than double, reaching 857 TWh by 2028—a CAGR of 19.5%.
- The U.S. remains a global leader in data center capacity, hosting half of the world’s 10,655 data centers as of early 2024.
- Multiple sources project this demand will surge dramatically through 2030, albeit at varying rates, amplifying the pressure on power infrastructure and sustainability efforts.
Goldman Sachs Research forecasts global power demand from data centers will increase 50% by 2027 and by as much as 165% by the end of the decade (compared with 2023), writes James Schneider, a senior equity research analyst covering US telecom, digital infrastructure, and IT services, in the team’s report. The International Data Corp. in September 2024 that total electricity consumption by data centers will more than double, reaching 857 TWh by 2028—a CAGR of 19.5%. AI-specific workloads are anticipated to grow even faster, with energy consumption increasing at a CAGR of 44.7%, reaching 146.2 TWh by 2027. In a significant initiative, EPRI in October partnered with major utilities, power companies, grid operators, and tech firms like Google, Meta, and NVIDIA to demonstrate how data centers could transition from passive energy consumers to active, flexible grid resources.
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This is comprised of cloud computing workloads (54%), traditional workloads for typical business functions such as email or storage (32%), and AI (14%). Recent Chinese developments, and particularly the AI model known as DeepSeek, have raised concern about the returns on current and projected AI investment. Still, several questions remain about DeepSeek’s training, infrastructure, and ability to scale.
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These models must be trained on vast amounts of information, using power-intensive processors. Right now, coal provides about 30 percent of the energy needed to power data centres, but renewables and natural gas will increase their shares because of their lower costs and wider availability in key markets. Google last year signed a deal to get electricity from small nuclear reactors to help power its part in the artificial intelligence race. Together, the United States, Europe, and China currently account for about 85 percent of data center consumption.
Power and Data Center Sectors Join Forces to Resolve Mounting Electricity Demand Uncertainties
Driven by artificial intelligence (AI), cloud computing, and the digital transformation, U.S. data centers consumed an estimated 150 TWh of electricity in 2023—equivalent to around 3% of the nation’s power demand. Globally, data center demand hovered at 340 TWh in 2023—about 1.3% of worldwide electricity use. Multiple sources project this demand will surge dramatically through 2030, albeit at varying rates, amplifying the pressure on power infrastructure and sustainability efforts. But pinning down how much infrastructure will be needed is challenging, given that projections for U.S. data center electricity consumption through 2030 vary so widely depending on growth assumptions, efficiency improvements, and the pace of AI-driven workloads. Most assessments present data center electricity consumption growth over time using a compound annual growth rate (CAGR) to account for annual compounding effects.
At the current rate, data centres will consume about 3 percent of global energy by 2030, the report said. According to the IEA, data centre electricity consumption will reach about 945 terawatt hours (TWH) by 2030. Data centres represented about 1.5 percent of global electricity consumption in 2024, but that has increased by 12 percent annually over the past five years. Generative AI requires colossal computing power to process information accumulated in gigantic databases. The IEA further notes that projections for this phase of data center expansion remain tentative.
Meanwhile, the Electric Power Research Institute (EPRI) estimates that the data center share of electricity load in Virginia could climb to 50% by 2030, with similar trends expected in other major U.S. states. In a May 2024 white paper, EPRI explored four scenarios for potential data center load growth, combining estimates of increased data processing needs with assumptions about efficiency gains. It suggests that electricity usage by hyperscalers—data centers capable of rapidly scaling up their operations to meet the vast computing needs—more than doubled between 2017 and 2021. “This increase is expected to continue, with data centers projected to consume 5% to 9% of U.S. electricity generation annually by 2030, up from 4% today,” EPRI says. “Every year, we refresh our data center load growth,” said Stephen George, director of Operational Performance Training and Integration at ISO New England, during the conference. For now, the surging demand growth is poised to put immense pressure on power markets like PJM, which has sustained flat load growth over the past decade.
THE BIG PICTURE: How Much Power Will Data Centers Consume? (Infographic)
The electricity consumption of data centres is projected to more than double by 2030, according to a report from the International Energy Agency published today. “Data center supply — specifically the rate at which incremental supply is built — has been constrained over the past 18 months,” Schneider says. These constraints have arisen from the inability of utilities to expand transmission capacity because of permitting delays, supply chain bottlenecks, and infrastructure that is both costly and time-intensive to upgrade. By modeling future demand for each of these workload types, our analysts project power demand will reach 84 GW by 2027, with AI growing to 27% of the overall market, cloud dropping to 50%, and traditional workloads falling to 23%.
While data centers remain a smaller driver of overall electricity demand growth, their concentrated impact on key regions amplifies the challenge of ensuring reliable and sustainable power, it suggests. Virginia’s so-called “Data Center Alley” alone hosts more than 3 GW of data center capacity (with 94 facilities connected since 2019)—making it the world’s largest data center market. Projections suggest an additional 11 GW of capacity by 2030—equivalent to more than 40% of Virginia’s current peak demand, according to Aurora Energy Research.
The firm’s analysis indicates that this growth will also drive up wholesale power prices by up to 30% by 2035, potentially deterring new data centers from the region. States like Texas and North Carolina are competing aggressively with Virginia, offering incentives to attract future data center expansions. Taken together, the balance of data center supply and demand is forecast by Goldman Sachs Research to tighten in the coming years. The occupancy rate for this infrastructure is projected to increase from around 85% in 2023 to a potential peak of more than 95% in late 2026. That will likely be followed by a moderation starting in 2027, as more data centers come online and AI-driven demand growth slows. Similarly, the Electric Reliability Council of Texas (ERCOT) in April estimated an additional 40 GW of load growth by 2030 compared to last year’s forecast, driven by large industrial projects, increased electrification, and the rapid expansion of data centers and cryptocurrency mining operations.