A voltage fluctuation in northern Virginia triggered the simultaneous disconnection of 60 data centers in July 2024, creating a 1,500-megawatt power surplus and forcing emergency adjustments to prevent cascading outages, according to a report by the Belfer Center for Science and International Affairs at Harvard University.
The incident underscores the growing strain that hyperscale data center development is placing on the U.S. Electric grid, as demand for computing power—driven largely by artificial intelligence—surges. Data centers accounted for 4.4% of total U.S. Electricity consumption in 2023, consuming 176 terawatt-hours (TWh), according to Lawrence Berkeley National Laboratory. That figure rose from 1.4% in 2014, when consumption was 58 TWh.
The expansion is not uniform. Northern Virginia is currently the largest data center market in the United States. States are actively competing to attract data centers, offering discounted energy tariffs and tax incentives, though emerging regulatory debates are impacting market development, particularly in states like Texas, where Senate Bill 6 has signaled a potential shift toward greater market intervention.
The International Energy Agency (IEA) projects that data centers globally consumed approximately 460 TWh in 2022, representing about 2% of total worldwide electricity consumption. The IEA forecasts consumption will reach between 650-1,050 TWh by 2026, accounting for roughly 1.5% of global electricity consumption in 2024. Combined with data transmission networks, data centers and their supporting infrastructure account for roughly 1% of global energy-related CO2 emissions, a percentage that is rapidly increasing.
Forecasts for U.S. Data center electricity demand vary. The Electric Power Research Institute estimates consumption could range from 4.6% to 9.1% of all U.S. Electricity by 2030, a difference of approximately 200 terawatt-hours—equivalent to the energy consumption of nearly 11 million homes. Lawrence Berkeley National Laboratory predicts demand will grow to between 325-580 TWh by 2028, representing 6.7-12% of total U.S. Electricity consumption. The U.S. Department of Energy projects 325-580 TWh by 2028 as well.
The future of data center electricity consumption will depend on the balance between increasing digital demand and improvements in efficiency. Innovations in cooling technologies, the increased apply of renewable energy sources and more efficient processors offer potential pathways for sustainable growth, according to industry analysts. However, the IEA notes that the rapid proliferation of AI applications is a key driver of increased energy demand.
The potential for data centers to affect Americans’ electricity bills is a growing concern. Investors are calling for massive investments in energy generation and grid infrastructure to support data center development and mitigate outage risks, but the possibility of stranded costs remains if anticipated demand does not materialize.
