Three ways electricity demand is growing

Data center with server racks (Photo credit: DC Studio, Freepik)

Since the year 2000, electricity use in the United States has been relatively flat. That means we haven’t needed much new electricity generation. Adding any new capacity to the electric grid—such as wind power, solar power, and natural gas—has generally meant retiring other electricity sources, especially coal. This is a very different picture than for developing countries such as India, which have had large demand for new electricity, especially to give more of their population energy access.

But U.S. electricity demand is changing. Early this year, the EFI Foundation convened a workshop with electricity sector stakeholders who said they expect electricity demand to grow significantly— end the era of flat demand. They said the pace of this electricity load growth could at least double and potentially triple over the next five years. The main causes? Data centers, domestic manufacturing, and electrification.

Source: Energy Information Administration, “U.S. energy facts explained.

Data centers: Cloud computing, big data processing, and artificial intelligence have all become more prevalent, and they require data centers to storage, manage, and deliver information. Data centers have been called “the modern nerve centers of the digital world,” and their electricity demand is expected to triple by 2030. Stakeholders in the EFI Foundation convening said they think that is an undercount of how much actual demand increase we will see.

Manufacturing: The Inflation Reduction Act, passed in 2022, included massive incentives for domestic manufacturing. These incentives are expected to boost U.S. production of steel, iron, and manufactured products, as well as to boost solar power manufacturing and recycling. These processes will all require electricity, which would  add to the current load. Other drivers of the surge in expected electricity load growth are industrial facilities—especially battery and automotive facilities, as well as hydrogen plants.

Electrification: Efforts to electrify are underway across the country. In some regions, including New York State, electrification is the dominant source of electricity demand growth. Electrification efforts include transitioning to electric vehicles in the transportation sector and transitioning to electric heat pump and water heaters in buildings.

Check out the EFI Foundation’s workshop summary report for more details about growing electricity demand in the United States. Utilities and other electricity planners are trying to get the data and certainty they need to make good decisions on how to respond to these expected electricity load increases, while continuing to move toward a net-zero emissions economy. The Unites States will need new infrastructure (including transmission) and new (clean) electricity generation to meet the increasing demand. We at the EFI Foundation are looking forward to continuing more work on this important topic.

Alicia Moulton, Deputy Director of Communications

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