- The surge in electricity demand from data centers, AI, domestic chip manufacturing, and electric vehicles complicates energy allocation while striving for decarbonization, raising concerns about the U.S. economy’s stability.
- Data centers supporting AI and EVs are projected to add 290 terawatt hours of electricity demand by 2030, prompting tech giants to urgently request more power, comparable to a nuclear reactor’s capacity.
- Executives advocate for federal action to boost power capacity, with projections indicating a 38% demand increase in the next two decades and data centers potentially consuming up to 9% of U.S. electricity by 2030, emphasizing the need for nuclear energy and security investments.
As climate change continues to be a primary obstacle for the United States to fight, it must also address a surge in electricity demand by consumers. On top of that, data centers that utilize computing and hardware systems to store, process, and share data require increasing quantities of energy to operate. This, combined with the ongoing artificial intelligence revolution, expansion of domestic chip manufacturing to decrease dependence on Chinese chip-making, and the desire to transition to electric vehicles, complicate energy allocations while decarbonizing the economy. Despite U.S. Energy Secretary Jennifer Granholm and the White House publicly pledging to increase U.S. power capacity, emphasizing nuclear energy, many have raised concerns that an inability to do so can jeopardize the national economy.
How Much Energy is Needed?
According to a report by Rystad Energy, data centers that support AI and electric vehicles are expected to add 290 terawatt hours of electricity demand by 2030. To put this into perspective, this is almost equivalent to the entire electricity demand of Turkey, the world’s 18th-largest economy. NextEra Energy Resources Vice President of Infrastructure Development Peter Skantze said that the dominant tech centers, such as Amazon, Alphabet, Microsoft, and Meta, are urgently requesting more power for their sites, where some require a gigawatt of electricity, about the same as the capacity of a nuclear reactor. Skantze’s words hold significant weight, as NextEra is the biggest power company in the S&P utilities sector by market capitalization and operates the most renewable energy assets nationwide. He added a personal anecdote, declaring that “if I can’t get the power capacity online, operate the data center, conduct manufacturing processes, nor grow the core businesses of the largest corporations in the nation. The stakes are high.”
Northern Virginia and Dominion Energy
According to the U.S. Energy Information Administration (EIA), the rise in commercial electricity demand centers in a few states undergoing rapid development of computing facilities, such as data centers. Chief among these is Northern Virginia, the largest data center market in the world by a significant margin, and added 14 billion kilowatt hours last year. Power Engineering reported that 94 new facilities have been connected to their grid since 2019, enabling access to a densely packed population and four underwater fiber cables. Dominion Energy CEO Robert Blue suggested exploring technological developments such as small modular reactors to satisfy system requirements. CNBC also reported that Southern Company, the second-largest utility in the U.S., has 723 gigawatts under construction, a 211% yearly increase. Their CEO, Chris Womack, said that nuclear energy has to play a considerable role in the focus of decarbonization, claiming that the U.S. needs more than 10 gigawatts of new nuclear power to ensure a reliable power supply in the face of fluctuating weather conditions.
What Now?
Executives are hopeful that the federal government will act on corporate pleas to increase power capacity, as numerous projections have estimated that energy demand will skyrocket. NextEra CEO John Ketchum informed investors that demand will increase by 38% over the next two decades, and the Electric Power Research Institute (EPRI) conducted a study indicating that data centers could consume up to 9% of U.S. electricity generation by 2030. However, policies for a larger power capacity also correlate with additional security investments, as Dominion CEO Blue emphasized that additional electrification of the power grid increases reliance on the energy infrastructure. Therefore, vigilance is required to protect the system from physical and cyber threats.
