Data centers could account for nearly 9% of US electricity consumption within 10 years

The development of artificial intelligence is turning data centers into huge energy consumers. By 2035, data centers are expected to account for nearly 9% of US electricity consumption, more than double their current share. The next generation of data centers has several distinctive features: it requires enormous computing power, is characterized by concentrated ownership and has a major impact on local power grids.

Researchers at BloombergNEF (BNEF) expect the power demand of US data centers to rise to 78 GW by 2035, more than double the current level of around 35 GW. Electricity consumption at data centers is expected to grow even faster, increasing from around 140 TWh (average hourly consumption of 16 GWh) in 2024 to just under 430 TWh (average hourly consumption of 49 GWh) in 2035.

Four key players and the need for new locations

Alongside its forecast of rapidly rising demand, BNEF researchers point to specific features of the growing electricity consumption of data centers under construction. These include the fact that demand is not fragmented, as it is in other growing segments such as electric mobility and heat pumps. Instead, four companies—Amazon Web Services (AWS), Google, Meta and Microsoft—account for 42% of US data center capacity. AWS also plans to quadruple the power demand of its data centers, from the current 3 GW to nearly 12 GW.

For companies developing advanced artificial intelligence models, being able to secure data center capacity quickly is crucial. This is placing greater emphasis on locations with sufficient grid capacity, short connection lead times, tax incentives and available land. As a result, developers are increasingly looking beyond traditional data center hubs such as Virginia, Oregon, Texas and California.

Demand will grow beyond the US

Although the United States is a global leader in data centers, demand growth in other parts of the world is also gathering pace. BNEF expects global electricity consumption by data centers to rise to 1 200 TWh by 2035 and then to 3 700 TWh by 2050.

"Our short-term outlook is affected by challenges associated with developing new projects. The long-term outlook, which is naturally subject to greater uncertainty, is based on fundamental assumptions: how much data people will need and how much energy will be required to process, store and transmit it," BNEF added.