Failure to meet growing demand for data center energy will threaten economic growth, utility executives warn – NBC 5 Dallas-Fort Worth

• The United States is facing massive growth in energy demand from data centers and the electrification of the economy.
• The projected demand from data centers and electric vehicles alone by 2030 is equal to Turkey’s total electricity demand.
• Executives from NextEra Energy, Southern Company and Dominion Energy say meeting this demand is critical to the U.S. economy and national security.

Major U.S. utilities have warned that the country is facing a surge in electricity demand not seen in decades, and failure to quickly ramp up power generation could threaten the nation’s economy.

After more than a decade of largely flat growth, electricity demand could surge by 2030 as the artificial intelligence revolution, the rise of chip manufacturing and the electrification of the vehicle fleet converge at a time when the United States is trying to address climate change.

According to a report published this week by consulting firm Rystad Energy, the expansion of technology data centers alone to support artificial intelligence and the introduction of electric vehicles are expected to increase electricity demand by 290 terawatt hours by the end of the decade.

According to Rystad, the expected demand from U.S. data centers and electric vehicles is equal to the entire electricity demand of Turkey, the world’s 18th largest economy.

“This growth is a race against time to increase energy generation without overwhelming power systems to their limits,” Rystad analyst Surya Hendry said in a statement after the report was released.

“The stakes are really, really high.”

The major technology players — Amazon, Alphabet’s Google unit, Microsoft and Meta — are all clamoring for more power as they launch data centers that, in some cases, require a gigawatt of electricity, said Petter Skantze, vice president of infrastructure development at NextEra Energy Resources. To put that in context, a gigawatt is equivalent to the capacity of a nuclear reactor.

NextEra Energy, the parent company of the Skantze subsidiary, is the largest energy company in the S&P Utilities sector by market capitalization and manages the largest portfolio of renewable energy assets in the country.

“This is a whole other urgent issue. They need this charge to fuel the next phase of growth,” Skantze told the Reuters Global Energy Transition conference in New York this week. “They’re now showing up at the utility, knocking on the door and saying I need to connect this source to the grid,” the executive said.

A big challenge will be having enough resources to connect these large data center projects to the power grid, Skantze said. The executive said the stakes for the U.S. economy are high.

“If I can’t get that much power through the Internet, I can’t build a data center. I can’t do manufacturing. I can’t do the core business of the largest corporations in the country,” Skantze said. “The stakes are really high. It’s a new environment. We have to deal with it.”

NextEra CEO John Ketchum told investors earlier this month that U.S. energy demand will grow 38% over the next two decades, a fourfold increase from the annual growth rate over the previous 20 years. NextEra expects most of the demand will be met by renewables and battery storage, Ketchum said. The company has a 300-gigawatt portfolio of renewable and energy storage projects.

“Energy security ensures national security”

Southern Company, the second-largest U.S. utility by market capitalization, is also seeing a historic surge in electricity demand. The utility is headquartered in Atlanta, one of the fastest-growing U.S. data center markets, with 723 gigawatts under construction in 2023, up 211% from a year earlier, according to real estate services firm CBRE.

Southern Company President Chris Womack said the company is seeing a level of demand not seen since air conditioning and heat pumps first came to the South in the 1970s and 1980s. The utility expects demand to increase three- or fourfold, he said.

“A lot of it depends and depends on what we see in AI and all these big learning models and what data centers are going to consume,” Womack said. “You also see in the Southeast this incredible population growth and you see all this onshoring with manufacturing.”

Meeting the demand for reliable energy is a matter of economic and national security, Womack said. Southern expects to meet 80% of its demand from renewable sources by the end of the decade, he added.

But he argued that nuclear and natural gas would be key to supporting wind and solar power, which still struggle to deliver power when weather conditions are not the best.

“Nuclear power must be a big part of this mix, the focus on decarbonization in the future, to provide the power, energy and electricity that this economy needs,” Womack told the Reuters Global Energy Transition conference. He said the United States needs more than 10 gigawatts of new nuclear power to reliably meet demand while meeting climate goals.

“Energy security ensures national security and also creates and supports economic security,” Womack said. “We need to strike a balance and meet the needs of sustainable development. But to ensure that we can continue to have a growing and prosperous economy, we need to get energy right.”

In Northern Virginia, the largest data center market in the world, Dominion Energy is going through three transitions at once, said CEO Robert Blue. The clean energy transition comes as the U.S. simultaneously shifts to powering everything by electricity and turning everything into data, Blue told a Reuters conference.

Echoing Southern’s CEO, Blue said Dominion is adding “an incredible amount of renewable energy” to make the system work, but other energy sources will also be needed.

“We’re going to have to look at natural gas and potentially even further technologies, whether it’s small modular reactors or hydrogen, if we’re going to deal with these three transition stages,” Blue said. Reuters conference.

Small modular reactors are an evolution of nuclear power that is still in the development phase. Small reactors are seen by many in the industry as a potentially groundbreaking technology because, in theory, they are less capital intensive and easier to site than traditional nuclear power.

Blue also warned that electrifying everything comes with the trade-off of making people even more dependent on the grid. That makes grid security crucial to the country’s future, he said.

“As we electrify everything, people are becoming more and more dependent on the grid,” Blue said. “That’s why we need to make sure it’s secured against physical and cyber threats.”