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Rystad Energy

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AI and EV Boom To Add 290 TWh of New Electricity Demand in the U.S.

  • Data centers and electric vehicles are expected to add 290 TWh of new electricity demand in the US by 2030.
  • Renewable energy sources, such as solar and wind power, are projected to meet the rising power demand while displacing coal in the generation mix.
  • Federal policies and import tariffs aim to rejuvenate US manufacturing, leading to increased industrial power consumption.
Data Center

Total US electricity demand has remained relatively stable at around 4,000 terawatt-hours (TWh) since 2010, but as electrification accelerates, that’s about to change. The build-out of data centers and more widespread adoption of electric vehicles (EVs) is expected to ramp up electricity demand in the US in the coming years, with Rystad Energy’s research predicting these two sectors alone will add 290 TWh of new demand by 2030.

Leading up to that point, the growth in electricity demand for data centers will be heavily driven by those focused on artificial intelligence (AI), which consumes more electricity compared to traditional computing. Overall, the combined expansion of traditional and AI data centers, along with chip foundries, will increase demand cumulatively by 177 TWh from 2023 to 2030, reaching a total of 307 TWh. Despite data centers currently representing a relatively modest portion of total electricity demand in the US, this marks a more than two-fold increase compared to 2023 levels, which stood at 130 TWh, highlighting the efforts of the US to position itself as a global data center hub.  

EVs will emerge as the second major catalyst for power demand growth in the US market up to 2030. In 2023, electricity consumption in the transportation sector totaled 18.3 TWh. By 2030, this figure is projected to soar to 131 TWh, driven primarily by the expansion of battery electric vehicles (BEVs).

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 countrym such as Turkey, that the US has to take on. This growth is a race against time to expand power generation without overwhelming electricity systems to the point of stress. 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 US power systems to endure,

Surya Hendry, Analyst, Rystad Energy

Learn more with Rystad Energy’s Renewables & Power Solution.

In tandem, Rystad Energy forecasts that total US power demand across the residential, commercial and industrial sectors will grow by 175 TWh between 2023 and 2030, bringing the country's demand close to 4,500 TWh. To support this growth, renewable energy capacity continues to expand at a strong rate, aided by incentives from the Inflation Reduction Act (IRA).

In recent years, coal reliance in the US has diminished, resulting in a smaller carbon footprint. This trend is forecast to continue as coal generation looks set to decrease while overall power generation is expected to rise. The power mix will increasingly be defined by renewable energy growth and declining coal generation, supported by the Inflation Reduction Act  and lowering costs for solar and wind generation technologies. Most states are embracing renewable energy and natural gas in comparison to coal plants, in an effort to become greener and achieve climate goals. Overall, natural gas will continue to dominate much of the US power mix for the next decade, but renewable energy will play an increasingly important role.

Solar PV capacity is expected to increase by 237 GW between 2023 and 2030, while wind capacity is projected to grow by 78 GW. The strong growth from these two sources should be sufficient to meet the rising power demand brought by data centers and EVs in the US, while continuing to displace coal in the generation mix.

The US residential sector is projected to see a 10% increase in demand, from 1,466 TWh in 2023 to 1,600 TWh in 2030. This rise can be attributed to the promotion of home electrification for everyday purposes such as heating, cooling and cooking. Federal and state-level incentives to replace fossil-fueled appliances with electric ones will contribute to this gradual growth in demand. Additionally, the persistent post-pandemic work-from-home culture is expected to further support demand in this sector.

Work-from-home culture has also affected the commercial sector to some degree, creating a situation where there is lower utilization of office space, which remains stubbornly below pre-pandemic levels. Abundant newer office space for lease has also incentivized companies to move into more energy-efficient buildings, helping dent demand. Additionally, the increase in e-commerce will continue to reduce the need for brick-and-mortar commercial facilities and will lead to a gradual decline in power consumption from this sector. Rystad Energy forecasts that power demand in the US commercial sector will decrease from 1,237 TWh in 2023 to 1,158 TWh by 2030.

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 US. This, combined with federal and state decarbonization policies, will result in the gradual replacement of fossil fuels with electricity within the sector. However, the forecasted consumption growth will be limited by higher efficiencies and a systemic shift in the US economy away from heavy industry toward tertiary sectors. Overall, Rystad Energy forecasts that power demand from the US industrial sector will rise from 1,133 TWh in 2023 to 1,238 TWh in 2030, representing a 9% increase.

By Rystad Energy

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