A recent report by The Conference Board highlights the dual impact of rising AI technology on United States electricity demand. The increasing need for data centers, fueled by AI, cloud storage, and cryptocurrency, is projected to significantly boost electricity consumption, potentially straining the national grid across the United States.
Analysts forecast that power demand in the U.S. from data centers could more than double in the next decade, contributing to a projected 4.7% rise in nationwide electricity demand over the next five years, nearly double the previous estimate.
However, historical trends suggest that past projections of dramatic energy consumption increases have often been overstated. Despite the widespread adoption of smartphones and the Internet, actual electricity demand growth was mitigated by advancements in energy efficiency and economic downturns. For instance, between 2005 and 2010, the EPA predicted a doubling of energy consumption by data centers, but the actual increase was only 36%.
AI presents a significant challenge to utilities and the grid, with current AI models like ChatGPT consuming over 500,000 kWh per day, far exceeding the average U.S. household consumption of 29 kWh. The computational power required for AI is expected to double every 100 days, driving a 26% to 36% annual increase in global energy demand from AI technologies.
8,000 Data Centers Worldwide – One-Third in U.S.
Despite these demands, AI also offers potential efficiencies. By optimizing electricity usage and shifting high-demand tasks to off-peak hours, AI could help reduce costs and enhance grid capacity. These efficiencies could potentially offset the projected rise in power demand, similar to the mitigated impacts seen with the proliferation of smartphones and the internet.
The U.S. energy grid would face additional challenges due to increased demand, especially from data centers. With over 8,000 data centers globally, one-third of which are in the U.S., these facilities consume substantial amounts of water and critical infrastructure. Data centers are estimated to use between 1 million and 5 million gallons of water daily, equivalent to the daily consumption of 10,000 to 50,000 residents.
Long-term planning would be essential to address these challenges. The Federal Regulatory Energy Commission’s Order No. 1920 mandates that transmission operators plan for future demand, addressing capacity needs for the next two decades. A shortage of transformers, exacerbated by rising demand from data centers and AI technologies, continues to strain the US energy market.
The Conference Board, a century-old think tank, emphasizes the need for strategic insights and long-term planning to manage these challenges while harnessing AI’s potential efficiencies. The report underscores the critical balance between accommodating rising electricity demand and implementing innovations that can drive significant efficiencies in energy use.
