How Data Centers Can Set The Stage For Larger Power Demand To Come

Data centers, due to their growing power demand, can set a precedent for how to handle load growth in a way that supports the grid and ensures reliable, resilient, carbon-free electricity.

By Alexandra Gorin, Roberto Zanchi,  Mark Dyson

Learn More in full article published May 3, 2024

The Data Center Demand Surge and Its Implications

The United States is witnessing an unprecedented surge in data center power demand, which is expected to double from 2022 levels to 35 GW by 2030. Projected to reach up to 7.5 percent of the country’s total energy consumption, this level of demand is equivalent to the energy consumption of nearly a third of (40 million) American homes. This dramatic growth, marked by a record-breaking 4.3 GW of new transactions in 2023 alone, is fueled by the expanding needs of cloud computing, cryptocurrency mining, and artificial intelligence (AI) workloads, including large language models that require substantial power for operation. The impact of this growth is driving mounting concerns over grid reliability and decarbonization as these workloads push up against existing grid capacities.

Many utilities are turning to gas as a solution to address load growth, reporting to add 16.9 GW of new gas generation between 2023 and 2027. However, they have other options. Data center load growth could exceed $100 billion in annual investment directed toward the energy system; this can influence the types of generation, siting decisions, and cost allocations that will be used to meet it. Data centers can help reshape the energy landscape and set a precedent for larger loads to come from electric vehicles (EVs), onshoring industry, manufacturing, and building electrification. Proactive system-level approaches to address grid reliability and promote carbon-free electricity and storage are critical for overcoming default energy solutions that would add natural gas plants, deploy diesel backup generators, or postpone fossil fuel assets retirements.

Data Centers Can Support Reliability and Decarbonization

To support grid reliability and decarbonization effectively, data center companies can implement four strategic solutions: maximizing energy efficiency, enhancing demand flexibility, getting more out of existing grid infrastructure, and negotiating for additional carbon-free energy and storage. These approaches are critical pathways toward a more sustainable and resilient energy future for data centers that support system-level progress on decarbonization, not just company-level goals and reporting.

LEARN MORE about how Data Centers can use the following strategies:

  • Maximize Energy Efficiency
  • Enhance Demand Flexibility
  • Use Existing Infrastructure Better
  • Negotiate Access to Renewables and Storage with Utilities