Serving surging data center power consumption could require more than $2 trillion in new energy generation resources worldwide, according to a new report released by Bain & Company.
“Data centers’ annual global energy consumption could more than double by 2027 from 2023 levels, growing at a compound annual rate of 10% to 24% and potentially surpassing 1 million gigawatt hours in 2027, according to the latest forecasts as of this writing (though forecasts vary widely and are constantly being revised upward),” the report said.
These facilities “need eye-popping amounts of power,” Bain said, noting that serving a 1-gigawatt data center requires the capacity of about four natural gas plants or around half of a large nuclear plant.
“All told, meeting global data center demand could cost more than $2 trillion in new energy generation resources, according to Bain estimates,” it said.
“In the U.S. alone, adequately funding the capital investments to serve data center growth over the next decade would require utilities to generate 10% to 19% in additional revenue each year than previously forecast. That could incrementally increase customer bills by 1% annually through 2032, according to our analysis,” Bain said.
The report was written by Bain’s Maeghan Rouch, Aaron Denman, Peter Hanbury, Paul Renno, and Ellyn Gray.
U.S. Utilities Facing “Potentially Overwhelming Demand from Data Centers”
“Facing potentially overwhelming demand from data centers, US utilities are grappling with a challenge few executives anticipated: After years of navigating flat or shrinking demand, many organizations have forgotten what it takes to grow,” the report said.
“What’s more, they’re finding that capitalizing on this new opportunity will require a rapid, unprecedented transformation of their operating and business models,” Bain said.
For nearly two decades, efficiency and operational nimbleness were paramount while US electricity demand plateaued as a result of advances in energy efficiency and distributed generation offsetting economic growth. But the era of stagnant demand is over. The late 2022 breakthrough in generative AI and the ensuing data center boom blindsided utilities just as demand was also rising because of repatriated manufacturing, industrial policy, and vehicle electrification.
Now, US utilities are bracing for demand to outstrip supply during the next few years, with data centers accounting for the bulk of the increase.
“Supply, both in generation and transmission, will take years to catch up under all but the most conservative scenarios. By 2028, utilities would need to increase annual energy generation by between 7% and 26% above the 2023 total to meet projected demand. That’s far beyond the largest five-year generation boost of about 5% that US utilities achieved from 2005 through 2023,” the report said.
