Artificial intelligence is not only transforming the way we work and communicate, it is also placing significant pressure on our energy systems. The demand for electricity is rising as AI applications, machine learning models, and digital services expand rapidly. Data centers, the backbone of this digital revolution, are forecasted to consume up to 9 percent of the United States' total electricity by the 2030s. As AI adoption grows, utilities and regulators are facing urgent questions about how to prepare for a more power-intensive future.
Modern AI models, especially generative models, require massive computing resources. The infrastructure that supports these models includes thousands of high-performance servers housed in energy-intensive data centers. These facilities run continuously and demand both reliable power and efficient cooling systems. Major technology companies such as Google, Microsoft, Meta, and Amazon are building new data centers across the country to meet AI workload demands.
According to ICF consulting, data centers could require between 13 and 15 gigawatts of additional capacity by 2030 in the PJM Interconnection. The Department of Energy anticipates data centers will grow from using about 3 percent of the nation’s electricity today to more than 9 percent within the next decade. This shift marks one of the fastest-growing segments of electricity demand in the United States.
The Bank of America Institute projects that overall electricity demand in the United States will grow by 2.5 percent annually through 2035. This marks a sharp increase compared to the previous decade’s growth of around 0.5 percent per year. The acceleration is fueled by rapid technological change and widespread electrification across sectors.
Some regions are already experiencing stress. Northern Virginia, Georgia, and parts of Ohio are grappling with surging electricity loads linked to expanding data center development. In Pennsylvania-New Hersey-Maryland territory, capacity auction prices rose by 22 percent due to anticipated demand growth (Business Insider, 2025). As a result, residential consumers in affected states may see electricity bills rise by approximately $27 per month.
To accommodate this growing demand, utilities must invest in new generation resources, expand transmission lines, and upgrade substations. These projects are capital-intensive and require long lead times. Regulatory and permitting processes often create additional delays, making it difficult to respond quickly to new energy demands.
Many technology companies have pledged to run their operations on 100 percent renewable energy. However, the scale and immediacy of their electricity needs often outpace the availability of renewable resources. As a result, data centers sometimes rely on backup diesel generators or purchase electricity from fossil-fuel-heavy grids. These choices raise questions about the alignment between sustainability goals and operational realities.
The rapid expansion of data centers is prompting policymakers to reconsider how infrastructure costs are shared. Some argue that tech companies should bear a larger portion of the costs associated with the grid upgrades needed to support their operations. Rising electricity bills for households in high-growth areas have added urgency to this debate.
Meeting future demand requires faster and more efficient permitting processes. Utilities and regulators must collaborate to modernize the grid and expand capacity. Investments in smart grid technologies, energy storage, and advanced transmission systems will be essential to improving both flexibility and resilience.
Virtual power plants, which aggregate distributed energy resources such as rooftop solar, batteries, and smart appliances, offer a promising solution. These systems can help balance demand and supply more effectively, reducing the need for costly infrastructure expansion. Programs that encourage demand response and flexible energy use can also relieve pressure during peak periods.
The growth of AI and digital services is accelerating the transformation of our energy landscape. Utilities, regulators, and technology companies must work together to ensure that electricity supply can keep pace with innovation. Proactive planning, strategic investment, and policy reforms will be critical to powering a digital future that is both resilient and sustainable.
With 91% of new renewable projects in 2024 proving cheaper than fossil fuel alternatives, the financial case for energy transition investments is stronger than ever, driving capital flows and reshaping risk-reward profiles for investors.
