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Council Insights: Responding to the AI-Led Surge in Power Demand

U.S. power demand is surging for the first time in more than 20 years. Many observers point the finger at the artificial intelligence (AI) boom, which has spawned hundreds of data centers across the country. According to an analysis by the Boston Consulting Group, electricity demand at US data centers could triple by 2030. In addition, transformations associated with the clean energy transition—clean energy manufacturing, electric vehicle adoption, and widespread electrification—are coalescing to massively increase power demand over the next decade. In 2023, the North American Electric Reliability Corporation more than doubled its decade-long demand projection from the previous year.

While economic transformations that drive up power demand are certainly not new, the current trend is different in a several important ways. First, the increase in power demand is regionally concentrated. Second, data centers’ need for 24/7 service places a new kind of strain on utilities and regulators. In Georgia, which has a large concentration of data centers and new factories, projections for the next decade were revised to 17x the previous estimate. Projections for surging demand have led many utilities to delay the closure of coal-fired power plants and announce plans for new gas-fired plants, which could add emissions to our energy mix for decades.

Meeting surging power demand without compromising on climate goals will require rapid advances in energy efficiency alongside novel solutions like emerging grid- enhancing technologies. While some experts are confident that the right solutions can prevent power shortages, there is an urgent need for wide-scale grid improvements and permitting reform to enable faster siting, development, and construction of renewable energy production and expanded grid infrastructure.

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