Data Center Electricity Demand Projected to Quadruple by 2035
A new report from BloombergNEF indicates that U.S. data center electricity consumption will reach one-fifth of total generation by 2035 due to AI expansion. This surge poses significant challenges to existing power grids, which are already struggling to manage connection requests and rising costs.
The rapid expansion of artificial intelligence infrastructure is set to place unprecedented pressure on the United States power grid. According to a new report from BloombergNEF, data centers are projected to consume one-fifth of all electricity generated in the U.S. by 2035, a fourfold increase from current levels. This growth is driven primarily by the massive energy requirements of AI training and inference, which are expected to push data center capacity to nearly 200 gigawatts over the next decade.
The mechanics of this shift involve a concentrated surge in demand, with the U.S. expected to host 64% of global AI chip power demand by 2033. BloombergNEF’s latest forecast for 2035 is 83% higher than its own estimate from December, reflecting a broader trend of upward revisions across the industry. Organizations such as the Electric Power Research Institute (EPRI) and S&P have similarly increased their projections, citing the accelerated pace of data center development as a primary factor.
This development places significant strain on regional grids. The PJM Interconnection, which serves a region spanning from Virginia to Illinois, is expected to see 34% of its electricity capacity dedicated to data centers, while Texas’s ERCOT grid faces a 22% allocation. The PJM region, in particular, has faced operational difficulties, including a four-year pause on new connection applications. Despite these constraints, data centers accounted for 38% of charges in the grid manager’s most recent capacity auction, signaling that demand remains high even as electricity prices in the region have risen by 76% over the past year.
Globally, the trajectory of AI adoption suggests that data centers will generate 1,935 terawatt-hours of new electricity demand by 2033, an amount comparable to the annual consumption of India. As the industry continues to scale, the ability of existing electrical infrastructure to accommodate this load remains a critical point of concern. The long-term impact will likely depend on whether grid operators can modernize and expand capacity quickly enough to prevent further supply-demand imbalances and price volatility.