Data centers expected to use 4x more electricity by 2035

Data centers are projected to consume four times more electricity by 2035 than they currently do, according to a new report from BloombergNEF. By that date, these facilities are expected to account for one-fifth of all electricity generated in the United States, marking a dramatic increase from current levels. The report attributes this surge to the rapid expansion of artificial intelligence computing, which is anticipated to drive data center capacity to nearly 200 gigawatts over the next decade. The growth in AI-related activities will require substantial energy resources, with nearly half of the expanded capacity dedicated to training and inference tasks. Most of this activity is expected to remain within the United States, where by 2033, the nation will host 64% of AI chip usage based on power demand. These projections suggest that the U.S. will maintain a dominant role in the global AI infrastructure landscape. BloombergNEF's latest estimates show a significant upward revision in electricity demand predictions. The consultancy initially forecasted a certain level of consumption, but its updated projection indicates an 83% increase in electricity demand by 2035 compared to its earlier estimate. This adjustment aligns with similar changes made by other organizations such as the Electric Power Research Institute (EPRI), which more than doubled its 2024 electricity demand forecast, and Standard & Poor’s, which increased its prediction by over a third between October and April. These adjustments highlight the accelerating pace of data center development across the country. As the demand for data center services grows, many new facilities are expected to come online near existing electrical grids that are already under strain. For example, the PJM Interconnection, which serves parts of Virginia to Illinois, is projected to allocate 34% of its electricity to data centers, while the ERCOT system, covering most of Texas, will need to dedicate 22% of its generating capacity to meet this demand. These figures underscore the increasing pressure on regional power networks. PJM, which already hosts a significant portion of the country’s data centers, has faced challenges in managing the rising demand. In response to the growing number of connection requests from both large generators and heavy consumers, the organization temporarily halted applications for new sources to connect to the grid for four years. This decision placed the region in a difficult position as demand continued to rise. Although PJM reopened the application process in April, the situation has become so severe that one utility company, American Electric Power, has warned of potential withdrawal from the interconnection due to the imbalance between supply and demand. Electricity prices have risen by 76% over the past year, reflecting the tightness of the market. Despite these challenges, data centers remain eager to expand their presence within the PJM network. They accounted for 38% of the charges in the grid manager’s most recent capacity auction, indicating their continued interest in securing additional power supplies. While the U.S. is expected to lead in AI computing, the global impact of data center expansion will be felt widely. By 2033, if AI adoption proceeds rapidly, data centers globally will add approximately 1,935 terawatt-hours of new electricity demand, nearly equivalent to annual consumption in India.