data center energy demand forecasted to soar nearly 300% through 2035

Data Center Expansion and Electricity Demand

The projected growth in data center construction remains robust, with anticipated new facilities expected to necessitate 2.7 times – almost triple – the current electricity demand of the sector within the next ten years, as detailed in a recent BloombergNEF report.

Significant Increase in Power Consumption

By 2035, data centers are forecast to consume 106 gigawatts of power, a substantial increase from the 40 gigawatts utilized today. This expansion will largely take place in more rural locations due to increasing facility sizes and limited availability of sites near urban centers, according to BloombergNEF’s analysis.

Scale of New Data Centers

A key driver of this growth is the increasing scale of planned data centers. Currently, only 10% of data centers require over 50 megawatts of electricity. However, the average new facility constructed over the next decade is projected to draw more than 100 megawatts.

The largest facilities will significantly influence these figures. Approximately a quarter of new data centers will exceed 500 megawatts in size, with a select few surpassing 1 gigawatt.

Improved Utilization Rates

The utilization rate across all data centers is also expected to rise, moving from 59% to 69% as the demand for AI training and inference increases, ultimately accounting for nearly 40% of total data center computing.

Investment Surge

These findings align with the observed trend of AI companies accelerating the construction of more powerful data centers. Global investment in these facilities has reached $580 billion this year, exceeding worldwide spending on new oil supplies.

Revised Forecasts

The report represents a significant upward revision from a previous document published by the group in April. This adjustment is attributed to a surge in newly announced projects since then. The report notes that projects in earlier stages of development have the most substantial impact on long-term forecasts, given the average seven-year timeline for project completion.

Early-stage project plans have more than doubled between the beginning of 2024 and the beginning of 2025, separate from projects already committed or under construction.

Regional Concentration

A considerable portion of this new capacity is being planned for states including Virginia, Pennsylvania, Ohio, Illinois, and New Jersey. These states fall within the PJM Interconnection region, a transmission organization responsible for managing the electrical grid in several states, including Delaware, West Virginia, and portions of Kentucky and North Carolina.

The Texas Ercot grid is also anticipated to see substantial additions.

Grid Capacity Concerns

The report coincides with increased scrutiny of the PJM Interconnection by its independent monitor, Monitoring Analytics. A complaint has been filed with the Federal Energy Regulatory Commission (FERC), asserting that PJM possesses the authority to approve new data center connections only when the grid has sufficient capacity.

Monitoring Analytics argues that “PJM has the authority to require large new data center loads to wait to be added to the system until the loads can be served reliably,” and that “PJM has the authority to create a load queue.”

Impact on Electricity Prices

Furthermore, the organization contends that data centers are contributing to the current high electricity prices within the PJM region.

“PJM’s failure to clarify and enforce its existing rules and to protect reliable and affordable service in PJM is unjust and unreasonable,” the complaint states.