After more than two decades of relative stasis, electricity demand in the U.S. is expected to increase by 25% by 2030 and by more than 75% by 2050, compared to 2023—a transformation largely driven by the surge in new data centers needed to power the artificial intelligence (AI) boom. For utilities, the rapid growth presents unprecedented challenges, from staffing shortfalls and regulatory hurdles to grid limitations and technical problems. But it can also offer a major opportunity to expand infrastructure, earn returns on new capital investment and unlock long-term growth after decades of stagnation. Here’s how utilities can successfully navigate the moment and meet the energy demands of tomorrow.
A single hyperscale data center can have power demands of more than 100 MW, according to the International Energy Agency, with annual consumption on par with up to 400,000 electric cars. That means a new data center going online is like a new town being created overnight.
This is Part 1 of a three-part series on the impact of artificial intelligence (AI) on electric utility operations. Read more of POWER’s continuing coverage of AI and its effect on the power generation sector here.
This demand will be spread unevenly across utilities’ systems, creating significant hurdles for organizations already forced to make major updates to the grid on tight timelines. What’s more, utilities typically need to build a system around the data center, rather than simply adapting to what is there. Developing the infrastructure necessary to feed these centers therefore requires a total overhaul, such as system improvements to the conductor to increase capacity and replacing towers, or even constructing new transmission lines, instead of piecemeal adjustments. If new generation plants are needed to meet these load demands, these can take years to build. Utilities may need to look for ways to improve efficiency and reduce demand on the system in the meantime through solutions like non-wire alternatives or other distributed energy resources.
These buildouts require experienced engineers and resources, which not all utilities may have readily available. Talent shortages and expertise gaps will be a central obstacle in staffing these jobs. Most utilities have enough engineers on hand to design routine upgrades or the new systems planned over the course of the year, but few have the excess engineering workforce and infrastructure in place to prepare for new data center demand. For instance, connecting data centers to the grid will require engineers to examine generation capacity to see if the system meets the energy requirements in the near term. Another group of engineers will need to assess transmission and distribution for system planning, including the size of the conductors, their length and throughput, and the physical path between the substation and the facility. Utilities must take stock of whether they have the internal expertise on hand to manage a project of this size and with these unique parameters. If, for example, engineers are used to working on lower voltage, customer-dense distribution systems—when the data center project will require staff familiar with substation and power takeoff points—it may be time to bring in outside help by hiring companies that specialize in providing skilled workers for these projects.
