Back to posts

Turn on the Juice

March 14, 2024 | Posted in: Insights

As depicted below, usage of electricity in the U.S. has barely budged for the last twenty years.

However, in a major reversal, demand is now surging as a result of the proliferation of electric vehicles, modern factories, crypto mining, and heat pumps. Actually, the largest driver is growth in the number of data centers which are expected to increase in numbers by about 10% a year for the next decade. The growth in data centers is a function of widespread adoption of cloud storage, digitization, improved telecommunications, and the integration of artificial intelligence into the economy. Data centers currently consume about 2.5% of total electricity demand but that number could reach 7.5% by 2030. Forecasts of overall U.S. electricity consumption for the next five years have therefore almost doubled and many regions are already seeing significant stress on the power grid.

This expected growth raises all sorts of issues and questions. Given that it takes at least four years to build a new generating plant and as much as ten years to erect transmission lines, are we already way behind the curve? Will increased demand postpone the shutdown of aging coal fired plants? How will this impact the transition to wind, solar, and other forms of green energy? Will electricity shortages slow down the march of technology with negative implications for the economy? And, who will pay for the much needed improvement in electrical infrastructure?