U.S. electricity demand to rise spurred by the growth of data centers and electric vehicles
Energize Weekly, July 31, 2024
After remaining relatively flat for the last 20 years, U.S. electricity demand is projected to grow 13 percent by 2030, boosted by demands from data centers, electric vehicles (EVs) and changing patterns of residential use, according to consultant Rystad Energy.
Data centers and EVs will be the two main drivers adding 290 terawatt-hours (TWh) of new demand by 2030. Overall, Rystad Energy forecasts U.S. electricity demand rising to 4,500 TWh in 2030 from the current 4,000 TWh.
Demand trends in the U.S. mirror global trends as the International Energy Agency (IEA) projects worldwide electricity demand growing 4 percent in 2024, up from 2.5 percent in 2023. That would represent the highest growth rate since 2007.
“Demand in India is expected to surge by a massive 8 percent this year, driven by strong economic activity and powerful heatwaves,” the IEA said. China will see a 6 percent increase, a result of activity in services industries and industrial sectors, including the manufacturing of clean energy technologies.
In the U.S., the data center increase is due to the growing focus on artificial intelligence, which requires more computing capacity and electricity. Data centers, along with demand from chip foundries, will add 177 TWh of new demand between 2023 and 2030, bringing its total to 307 TWh.
“Despite data centers currently representing a relatively modest portion of total electricity demand in the U.S., this marks a more than two-fold increase compared to 2023 levels, which stood at 130 TWh, highlighting the efforts of the U.S. to position itself as a global data center hub,” Rystad Energy said.
The second largest growth sector for electricity demand is EVs, where electricity consumption is projected to rise to 131 TWh in 2030 compared to 18.1 TWh in 2023. The growth in electricity battery vehicles will be the main driver.
“In absolute terms, the growth in electricity demand from these two segments, EVs and data centers, is equivalent to the total electricity demand of a country such as Turkey, that the U.S. has to take on,” Surya Hendry, a Rystad Energy analyst, said in a statement.
Rystad Energy is forecasting that power demand in the U.S. residential and industrial sectors will grow by 239 TWh between 2023 and 2030.
The residential sector is expected to have about a 10 percent increase in demand to 1,600 TWh in 2030. The growth will come from home electrification in areas such as heating, cooling and cooking, as state and federal incentives for efficient electric appliances aim to move households off fossil fuels.
The continued work-from-home trend will also shift more electricity demand to the residential sector.
“The industrial sector is also expected to see short-term rejuvenation as federal policies and import tariffs for many products reverse the decades-long trend of offshoring manufacturing, potentially leading to the return of industrial activity in the U.S.,” Rystad Energy said.
Overall, the domestic industrial sector will see about a 9 percent increase in electricity demand increasing from 1,133 TWh in 2023 to 1,238 TWh in 2030.
The commercial sector is the only area that will see a decline in demand, Rystad Energy said, dropping nearly 7 percent between 2023 and 2030 to 1,158 TWh.
While work-from-home is helping increase residential demand, it is trimming commercial demand with the lower utilization of office space, which remains below pre-pandemic levels. The increase in e-commerce is also reducing the need for brick-and-mortar stores, resulting in less demand for electricity.
That small decline in the commercial sector will be hardly felt as electricity demand across every other sector grows.
“This growth is a race against time to expand power generation without overwhelming electricity systems to the point of stress,” Rystad Energy’s Hendry said.” If you envision cleaner roads and sustainable AI for the future, renewable energy is the key to meeting this demand and providing the scalability needed for U.S. power systems to endure.”
