The boom in artificial intelligence and electric vehicles will increase US electricity demand by 290 TWh

Total U.S. electricity demand has remained relatively stable at around 4,000 terawatt hours (TWh) since 2010, but as electrification accelerates, this is about to change. The expansion of data centers and the broader adoption of electric vehicles (EVs) are expected to increase U.S. electricity demand in the coming years, and Rystad Energy research predicts that these two sectors alone will add 290 TWh of new demand by 2030.

Until then, the growth in electricity demand in data centers will largely be driven by centers focusing on artificial intelligence (AI), which consumes more electricity compared to traditional computing. Overall, the combined expansion of traditional data centers and AI data centers together with chip foundries will increase demand by a total of 177 TWh between 2023 and 2030, reaching a total of 307 TWh. Although data centers currently represent a relatively modest share of total U.S. electricity demand, this represents a more than doubling of 2023 levels of 130 TWh, underscoring the U.S.’s efforts to position itself as a global data center provider .

Electric vehicles will become the second main catalyst for increasing energy demand in the US market by 2030. In 2023, electricity consumption in the transport sector amounted to 18.3 TWh. This number is expected to increase to 131 TWh by 2030, mainly due to the development of battery electric vehicles (BEV).

In absolute terms, the increase in electricity demand in these two segments, electric vehicles and data centers, is equal to the total electricity demand in a country like Turkey that the United States must meet. This increase is a race against time to increase energy production without taxing power systems to the point of stress. If you envision cleaner roads and sustainable AI in the future, renewable energy is key to meeting this demand and providing the scalability necessary for America’s power systems to survive.

Surya Hendry, Analyst, Rystad Energy

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At the same time, Rystad Energy projects that total U.S. residential, commercial, and industrial energy demand will increase by 175 TWh between 2023 and 2030, bringing the nation’s demand to nearly 4,500 TWh. To support this growth, renewable energy capacity continues to grow at a rapid pace, helped by incentives from the Inflation Reduction Act (IRA).

In recent years, dependence on coal in the U.S. has decreased, resulting in a smaller carbon footprint. This trend is expected to continue as coal production is expected to decline and overall energy production to increase. The energy mix will increasingly be defined by an increase in the share of renewable energy and a decline in coal production, supported by the Inflation Reduction Act and lower costs of solar and wind energy technologies. Most states are using renewable energy and natural gas over coal plants in an effort to become greener and meet climate goals. Overall, natural gas will continue to dominate much of the U.S. energy mix over the next decade, but renewable energy will play an increasingly important role.

Photovoltaic capacity is expected to increase by 237 GW between 2023 and 2030, and wind power capacity is expected to increase by 78 GW. Strong growth from these two sources should be enough to meet growing energy demand from data centers and electric vehicles in the US, while continuing to displace coal in the generation mix.

Demand in the U.S. residential sector is projected to increase by 10%, from 1,466 TWh in 2023 to 1,600 TWh in 2030. This growth can be attributed to the promotion of home electrification for everyday purposes such as heating, cooling and cooking. Federal and state incentives to replace fossil-fuel devices with electric devices will gradually increase demand. Additionally, the continuing post-pandemic work-from-home culture is expected to continue to support demand in this sector.

The work-from-home culture has also impacted the commercial sector to some extent, creating a situation where the use of office space is lower, remaining at levels lower than before the pandemic. Abundant, newer office space for rent has also encouraged companies to move to more energy-efficient buildings, helping to reduce demand. Additionally, the development of e-commerce will continue to reduce the demand for stationary retail facilities and will lead to a gradual decline in energy consumption in this sector. Rystad Energy forecasts that energy demand in the US commercial sector will decline from 1,237 TWh in 2023 to 1,158 TWh in 2030.

The industrial sector is also expected to experience a short-term recovery as federal policies and import tariffs on many products reverse the decades-long trend of offshoring manufacturing, potentially leading to a return of U.S. industrial activity. This, combined with federal and state decarbonization policies, will lead to the gradual replacement of fossil fuels with electricity in this sector. However, the projected increase in consumption will be limited by higher efficiency and a systemic shift in the US economy from heavy industry towards service sectors. Overall, Rystad Energy forecasts that energy demand from the US industrial sector will increase from 1,133 TWh in 2023 to 1,238 TWh in 2030, an increase of 9%.

By Rystad Energy

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