Data center electricity demand could nearly triple by 2035
As demand for artificial intelligence and cloud computing continues to accelerate, data center construction in the United States is set to drive a sharp increase in electricity consumption.
According to a new BloombergNEF report, data centers are projected to draw 106 gigawatts of power by 2035. That figure represents a 2.7-times increase from the current 40 gigawatts consumed by the sector. The growth not only reflects the scale of AI-related infrastructure but also raises urgent questions about grid capacity, regional energy planning, and environmental impact.
BloombergNEF’s updated forecast significantly revises earlier projections made just months ago. The firm attributes the change to a surge in new data center projects announced since early 2024, especially large-scale facilities that will come online toward the end of the decade. The report highlights a steep upward trend, noting that many upcoming sites will be far larger than those currently in operation. Nearly one-quarter of new facilities are expected to exceed 500 megawatts in capacity, with a handful surpassing one gigawatt.
Currently, only about 10 percent of data centers draw more than 50 megawatts. By contrast, future facilities are expected to average well over 100 megawatts. The growing demand is being driven in part by the increasing computational power required for AI training and inference. These workloads are expected to account for 40 percent of total data center compute within the next ten years. As a result, utilization rates across the sector are forecasted to rise from 59 percent to 69 percent.
Rising demand tests US grid capacity and regulatory oversight
Much of the new construction is concentrated in states like Virginia, Pennsylvania, Ohio, Illinois, and New Jersey. These states fall within the PJM Interconnection region, a critical part of the U.S. electrical grid that also includes Delaware, parts of Kentucky, North Carolina, and West Virginia. Texas, operating under the ERCOT grid, is also expected to see significant new capacity.
The rapid increase in projected load has raised concerns among grid regulators and oversight bodies. Monitoring Analytics, the independent market monitor for PJM, has filed a formal complaint with the Federal Energy Regulatory Commission (FERC), arguing that PJM must more clearly define its authority to approve large-scale data center connections. According to the group, PJM should be able to delay or deny new connections if the grid cannot reliably accommodate the additional load.
The complaint alleges that PJM has not enforced its own standards, thereby contributing to rising electricity prices in the region. It also calls on the grid operator to create a formal load queue to ensure new facilities are only connected when sufficient capacity exists. As demand continues to increase, regulators and utilities will face pressure to balance economic growth with the stability and affordability of electricity supply.
AI infrastructure boom redefines long-term energy strategy
The projected growth in data center energy use is already reshaping national energy discussions. Investment in data centers reached $580 billion in 2025, outpacing global exploration spending on oil. The shift reflects a broader transition in industrial priorities, where compute power and data processing are becoming central infrastructure concerns.
Energy experts argue that the growth in electricity demand presents both challenges and opportunities. Utilities will need to invest in new generation capacity and transmission lines to meet the rising load. Meanwhile, data center operators are exploring ways to reduce their environmental footprint through on-site generation, battery storage, and colocation with renewable energy assets.
Still, the overall effect on emissions and climate goals remains uncertain. While some operators are pursuing clean power agreements, the speed of construction and scale of consumption may outpace the deployment of green energy. Without coordinated policy, rising demand could strain public infrastructure, increase costs for residential and commercial users, and undercut broader efforts to decarbonize the power grid.
The next decade will require closer collaboration between data center developers, regulators, and utilities. As AI infrastructure becomes an increasingly critical part of the economy, so too will the systems that power it. The BloombergNEF report serves as a warning that current energy planning and regulatory structures may not be prepared for what is quickly becoming one of the most significant drivers of electricity demand in the country.
source energy-oil-gas.com