Action Plan Pushes Data Centers as Electric Demand Soars

Projections of the increase in electric demand expected in the coming years due to the rapid growth of data centers continue to proliferate, as large technology companies announce an increasing number of large projects across the country.

A recent U.S. Department of Energy report on data center use, produced by the Lawrence Berkeley National Laboratory, estimates that data center load growth has tripled since 2014, and is expected to double, and possibly triple, by 2028. An analysis by Goldman Sachs Research forecasts global power demand from data centers will increase 50% from 2023 to 2027 and by as much as 165% by the end of the decade.

 Most of the data center growth is being driven by the explosion of artificial intelligence (AI) advances. These data centers require massive amounts of 24/7 power to run “hyperscale” computing operations. Pennsylvania is among states seeing an increase in the number of data center projects due to its proximity to major East Coast cities and its abundant energy supply, with even more investment being announced at the recent Pennsylvania Energy and Innovation Summit.

And the White House wants to boost artificial intelligence even more, recently announcing an AI Action Plan to win an international race for dominance in the technology. The plan identifies more than 90 federal policy actions that can be taken to accelerate innovation, build AI infrastructure, and lead in international diplomacy and security.

An unanswered question is how the nation’s electric grid can support this rapid buildout and increase in demand for electricity. PJM Interconnection, which is the regional transmission organization for 13 Mid-Atlantic states, including Pennsylvania, is grappling with rapidly increasing demand at a time when new generation sources are not coming online fast enough. PJM has been working on changes to its rules and recently selected 51 projects to bring new generation capacity online quickly through a one-time initiative.  

The build out of the grid and accompanying infrastructure also means higher prices for electricity. PJM recently held its capacity auction, and for the second consecutive year, prices for guaranteed available electricity surged. This has also led to increasing discussion of who should pay for these upgrades, as concerns mount that retail ratepayers will shoulder a disproportionate share of the cost.

AI will likely reshape global national security, the economy, and the energy infrastructure, and much planning must be undertaken quickly to address many concerns that the technology presents.