Utility executives caution that economic growth will be at risk if data center energy demand continues to surge and is not met.

• The surge in demand for power from data centers and the electrification of the economy is posing a significant challenge to the U.S.
• The demand for electricity from data centers and electric vehicles combined by 2030 will be equivalent to the total electricity demand of Turkey.
• Executives from NextEra Energy, Southern Company, and Dominion Energy emphasize the importance of meeting demand for the U.S. economy and national security.

The nation's economy is at risk due to the surge in electricity demand that the largest utility companies in the U.S. are warning about, and failure to quickly increase power generation could lead to this.

By 2030, electricity demand is expected to surge due to the convergence of several factors, including the artificial intelligence revolution, the expansion of chip manufacturing, and the electrification of vehicles, as the U.S. strives to combat climate change.

By the end of the decade, the tech sector's construction of data centers for AI and the adoption of electric vehicles are predicted to increase electricity demand by 290 terawatt hours, according to a report released by Rystad Energy this week.

The demand for data centers and electric vehicles in the U.S. is equivalent to the entire electricity demand of Turkey, which is the 18th largest economy in the world, according to Rystad.

Surya Hendry, a Rystad analyst, stated in a release that this growth is a race against time to expand power generation without overwhelming electricity systems to the point of stress.

'The stakes are really, really high'

The tech giants, including Google's unit and , are urgently requesting more power as they bring data centers online that require a gigawatt of electricity, said Petter Skantze, vice president of infrastructure development at NextEra Energy Resources. This is equivalent to the capacity of a nuclear reactor.

The largest power company in the S&P utilities sector by market capitalization is Skantze's subsidiary, which also operates the largest portfolio of renewable energy assets in the nation.

Skantze stated at the Reuters Global Energy Transition conference in New York City that a new urgency is emerging, requiring the utilization of this load to drive the next phase of growth. The executive explained that this resource is being demanded by those who are now arriving at the utility and are insisting on its inclusion in the grid.

The challenge lies in ensuring that there are sufficient resources to link large data center projects to the power grid, according to Skantze. The stakes are high for the U.S. economy, the executive stated.

""If I am unable to bring that power capacity online, I will not be able to execute the data center and manufacturing processes. This will hinder the growth of some of the largest corporations in the country. The consequences are significant, as we are operating in a new environment. We must ensure that we get this right," Skantze stated."

John Ketchum, CEO of NextEra, informed investors that U.S. power demand is expected to increase by 38% over the next two decades, which is four times the annual rate of growth seen in the previous 20 years. Ketchum stated that the company anticipates meeting much of the demand through renewables and battery storage. NextEra has a pipeline of 300 gigawatts of renewable and storage projects.

'Energy security brings national security'

The second-largest utility in the U.S. by market cap, which is headquartered in Atlanta, is also experiencing a historic wave of electricity demand. This power company is located in one of the fastest growing data center markets in the U.S., with 723 gigawatts under construction in 2023, up 211% over the prior year, according to real estate services firm CBRE.

Chris Womack, CEO of Southern Company, stated that the company is currently experiencing a demand level not witnessed since the introduction of air conditioning and heat pumps in the South during the 1970s and 1980s. He predicts that demand will increase by three to four times.

"The growth of the population in the Southeast and the onshoring of manufacturing are also dependent on the advancements in artificial intelligence and large learning models, as well as the data centers that consume them, according to Womack."

Womack stated that meeting the demand for reliable power is crucial for both economic and national security. Southern anticipates that 80% of the demand will be fulfilled by renewables by the end of the decade, he added.

He maintained that nuclear and natural gas are essential to ensuring a steady supply of power when wind and solar energy face challenges due to unfavorable weather conditions.

To ensure the power and energy needs of the economy are met while decarbonizing, Womack emphasized that nuclear power must play a significant role in the mix. The U.S. requires more than 10 gigawatts of new nuclear power to reliably meet demand and achieve climate goals, he stated.

"To ensure a thriving economy, Womack emphasized the importance of balancing and meeting the needs of sustainability while also focusing on energy security."

In Northern Virginia, the world's largest data center market, CEO Robert Blue is managing three transitions at once. The transition to clean energy is happening as the U.S. is also moving towards running everything on electric power and turning everything into data, Blue said at a Reuters conference.

Blue, like the Southern's CEO, stated that Dominion is significantly increasing its renewable energy sources to maintain the system's operation. However, other energy sources will also be necessary.

To manage our way through the intersection of natural gas, small modular reactors, and hydrogen, we need to consider all of these technologies, according to Blue at the Reuters conference.

Small modular reactors represent a new advancement in nuclear power technology that is currently being developed. These reactors are considered by many in the industry to be a promising innovation due to their potential to be less expensive and easier to place on-site compared to traditional nuclear power plants.

Blue cautioned that the shift towards electrification may increase dependence on the grid, emphasizing the importance of securing the grid for the nation's future.

"To ensure the security of the grid as people increasingly rely on it for electrification, we must protect it from both physical and cyber threats, Blue stated."