RESEARCH REPORT
Powering the future of US data centers
10-MINUTE READ
March 6, 2025
In brief
- The data center market’s incredible growth is reshaping the energy landscape and putting electricity providers under pressure to keep up with demand.
- Renewable energy sources alone will not be able to meet the increasing demand and other energy supply options like nuclear and natural gas must be incorporated into the mix.
- Electricity providers can adopt a new set of short-, medium- and long-term actions to overcome potential infrastructure bottlenecks, power the future of technology and supercharge their own growth.
Keeping pace with the energy demands of data centers
The data center market has seen rapid growth in recent years—and is set to expand even more. Driven by advancements in generative AI and technology, this growth places significant pressure on electricity providers to deliver reliable and consistent power for data centers. And while renewable sources of energy are the preferred choice, they alone cannot meet the growing energy demands. In response, customers are now exploring alternatives to traditional data center power sources.
In short: Big changes are on the way, and the time to evolve is now.
Unprecedented growth and unforeseen challenges
The rapid adoption of AI and cloud, increasing consumer data services, and the evolution of computing technology are some of the key drivers fueling a surge in demand.
16-23%
of US electricity could be consumed by data centers alone by 2033.1
In 2023 alone, US data centers consumed 176 terawatt hours (TWh) of electricity and this could increase to between 413 and 509 TWh by 2030.2 The jump in consumption is primarily driven by data centers capable of accommodating advanced AI, which may account for 70% of overall demand surge with generative AI contributing about 40% by 2030.3
Balancing bottlenecks and business
Data centers have emerged in locations that offer a mix of benefits. From economic incentive to land availability, reliable utility interconnections and robust fiber connectivity, data center operators tend to seek as many favorable attributes as possible when scouting for locations. But the geographic imbalance of data centers leaves some regions overwhelmed and others underutilized.
80%
of US data center electricity consumption in 2023 was concentrated in 15 states.4
Electricity providers must adopt tailored strategies, including localized grid enhancements, to meet regional surges in demand while ensuring equitable energy distribution nationwide.
While renewable sources like wind and solar are central to long-term sustainability goals, they are intermittent and require advanced energy storage to fully support high-demand operations like data centers. Natural gas and nuclear energy, along with other options like geothermal and bioenergy, can help ensure a stable and clean energy supply. Fossil fuels will need to fill the gap which will increase in the coming years as demand grows.
Future trends and forecasts
Our bottom-up analysis of multiple growth scenarios revealed that even in the lowest growth scenarios, efficiency gains alone cannot address the surging energy demand driven by data centers. Multiple unpredictable factors will affect demand:
- Ever-increasing data processing needs for AI, edge and quantum computing, in addition to cryptocurrency mining, is gaining momentum.
- Growing sustainability concerns due to stricter regulations, direct investments in renewables and other factors are driving demand.
- Supply chain disruptions driven by geopolitical tensions and resource shortages are likely to be a headwind for data center growth.
- Technology evolutions on both the demand and supply side will continue and future technology platforms will require capabilities that enable providers to switch between different energy sources as needed.
- Global talent shortages in infrastructure build, operations and sustainability could slow the sector’s growth.
Our recommendations: Tactical plays and planning
Now is the time for action. By leveraging our short-, medium- and long-term recommendations as tactical plays, electricity providers can address the challenges they face.
Short-term recommendations
Electricity providers can start with the following to help address immediate challenges:
Leveraging AI and machine learning will enhance demand response through real-time, automated load optimization, energy demand predictions and personalized responses.
Engage with hyperscalers to help them understand utility long-range planning efforts. Identify locations with infrastructure capabilities and resources like power, fiber, water and cooling, and those with potential for renewable energy integration.
Improve interconnection timelines by simplifying processes for connecting data centers to the grid, boost regulatory opportunities through collaboration, and strengthen economic strategies via economic incentives that encourage sustainable practices.
Medium-term recommendations
The following take longer to develop but are vital to cater for growing demand:
Optimize existing power plants, diversify into cleaner energy solutions and increase investments in renewable energy and storage to ensure consistent supply and modular, scalable capacity for future demand.
Enhance grid capacity and resilience by optimizing current infrastructure, accelerating modernization with smart technologies, and allocating CapEx for comprehensive upgrades to support larger energy loads and prevent bottlenecks.
Provide tailored value-added services in low growth situations, expand customized green energy solutions as demand increases and implement real-time energy management solutions in high growth situations to deliver dependable, on-demand power.
Streamline processes to reduce delays, strengthen partnerships with local governments and stakeholders, and expand financial incentives to promote renewable energy, energy efficiency, and sustainable infrastructure.
Long-term recommendations for oversubscribed regions
The following long-term recommendations apply to oversubscribed regions that face significant capacity constraints due to high energy demand:
Incorporate advanced platforms and delivery infrastructure, enhance grid flexibility and integrate non-wired alternatives, and use AI demand forecasting and grid technologies to optimize resource allocation, improve reliability and meet demands.
Account for data center-driven power demand growth, technological disruptions and regulatory challenges, while incorporating renewable energy and scalable solutions like SMRs through an agile, incremental investment approach.
Offer tailored pricing and long-term contracts to ensure equitable cost distribution, prevent rate hikes for non-data center customers, and enhance financial sustainability through collaborative investments in renewables with data center operators.
Focus on proactive infrastructure planning, collaboration between electricity providers, data centers and regulatory bodies, and advocating for permanent economic incentives to attract long-term investments and drive sustainable growth.
Long-term recommendations for untapped regions
Electricity providers in untapped regions with minimal data center presence should also consider these additional actions.
Explore opportunities to offer reliable energy supplies—such as natural gas—until renewables can fully achieve zero-emissions power and emphasize stable rate designs and 24/7 resilient service to ensure predictable operating costs for data centers.
Promote the geographic advantages of service territories – affordable land, low FEMA Risk Index, proximity to major network interconnection points, cool water sources – to attract data centers seeking optimal sites for operations.
Assess opportunities to partner with data centers and high-consumption customers. Collaborate to develop a reliable energy grid with redundant power supplies, state-of-the-art transmission facilities and middle-mile data and fiber connectivity.
The path forward
Electricity providers must gain deeper insights into the potential growth of data centers and the significant impact on power demand. Advanced analytics and forecasting tools can provide data-driven insights, predict future power demands and identify potential bottlenecks, enabling proactive planning and cost-effective solutions. By combining these tools and services with robust stakeholder collaboration, the development of sustainable and resilient infrastructure can be accelerated. It will ensure that the power needs of growing data centers are met while also guaranteeing the growth of electricity providers.
Sources:
1 Accenture analysis.
2 Accenture Research modeling.
3 Dmytro Konovalov, “Global Market Scan: Data centers in the age of AI, a global investment surge” Daily Commercial News, December 24, 2024: D1, Factiva, Inc. All Rights Reserved.
4 Powering Intelligence: Analyzing Artificial Intelligence and Data Center Energy Consumption, EPRI, 24 May 2024, as reported in “Study estimates datacenters could take 9% of US power production by 2030”, Market Intelligence News, 29 May 2024: D1, Factiva, Inc. All Rights Reserved.
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