The need for more power in the U.S. is bona fide, and it’s not just data centers driving up demand, experts say.

“Growth is coming on a lot of fronts,” Sam Siegel, vice president of wholesale strategy for Vistra Corp., an Irving, Texas-based integrated retail electricity and power generation company, said during Hart Energy’s SUPER DUG Conference & Expo. “There has been significant co-location of manufacturing facilities or onshoring from East Asia and from Europe. There’s electrification of [vehicles] and … homes.”

The U.S. Energy Information Administration (EIA) forecasts total electricity consumption to rise from 4,103 billion kilowatt-hours (kWh) in 2024 to 4,159 billion kWh in 2025, led by growth in industrial sales followed by residential sales. Renewable energy sources—mainly utility-scale solar photovoltaic power plants—are expected to supply most of that growth.

“We all know about bitcoin mining. We’re hearing about AI. We’ve got electrolyzers off the back of that. What used to be an equation to solve for—10, 20, 30 megawatts—now starts with 300,” said Priority Power CEO Brandon Schwertner, session moderator. “People are looking for gigawatts, and there’s just intense competition which is driving prices higher. … My ‘spidey sense’ says that people are going to be shocked more than they ever have as it pertains to power.”

Demand is increasing as supply tries to keep up pace amid interconnection and transmission challenges.

Big demand, big challenges

Load growth from data centers is expected to rise by an estimated 35 gigawatts (GW) between today and 2030, Siegel said, adding load growth in the Permian Basin could be another 20 GW.

Competition could heat up, and costs may not be a big concern for Big Tech companies like Microsoft, Amazon and Google—the top buyers of renewable energy.

The power density of an AI data center is about four times that of a traditional data center, Schwertner said, noting power costs are roughly 1.5% of the overall capex for a data center.

“They do not care about cost at these prices,” he said. “They care about how fast.”

The days of low load growth—even negative load growth as seen in the Northeast—are ending, Siegel said. Racing to get ahead of the market on AI, including globally, is a focus for tech companies.

“There’s a focus on getting things built and getting that built quickly,” he said.

However, getting connected to the grid once the energy resources are in place is not a quick process.

Across the U.S., a total capacity of nearly 2.6 terawatts was in queue at the end of 2023 as more projects, incentivized by the Inflation Reduction Act, entered the line, according to a study released in April by the Lawrence Berkeley National Laboratory (Berkeley Lab).

The lab’s research also showed rising interconnection wait times, increasing from less than two years—from the initial connection request to an operational plant— for projects built from 2000 to 2007 to more than 4 years for those built in 2018 to 2023. However, it noted some—such as the Electric Reliability Council of Texas (ERCOT)—are processing requests more quickly.

“The supply side can get deployed reasonably quickly because it’s an open market. We can build power plants wherever we want where it makes economic sense and anyone can do so,” Siegel said referring to ERCOT. “You don’t need special licenses as opposed to markets that are vertically integrated, where you have to go through a public utility commission, get approval as part of an integrated resource plan.”

Eyeing ERCOT

Looking at Texas alone, which is mostly served by ERCOT, population growth, the electrification of oil and gas fields and data centers are among the main contributors to increasing power needs. Dallas has emerged as a significant growth area for data centers, following Virginia—which has about 315 data centers.

“We were very bullish on load growth anyway, and from our forecasts, we think you could have a CAGR between 2% on the low end up to 6% a year in Texas,” Siegel said. “That’s going to require a very, very significant investment to meet that demand. And it’s going to require some kind of innovation to manage the grid through periods of scarcity as we’re adjusting to that demand.”

ERCOT continued to break demand records as it moved toward the unofficial start of summer. Peak demand records for the month of April were shattered three times, surpassing the 60,995-megawatt (MW) record set on April 3, 2023. Demand reached 62,618 MW on April 18, 2024, before climbing to 63,151 MW on April 29 and reaching 63,997 MW on April 30 as springtime temperatures heated up and some power plants underwent annual maintenance. That was, however, still far from the 85,508 MW demand record set on Aug. 10, 2023.

ERCOT expects an estimated 40 GW of additional load growth by 2030 compared to its 2023 forecast. It projects about 152 GW of new load will be added to the system by 2030, with increases coming from not only data centers, electrification and crypto mining, but also hydrogen and hydrogen-related manufacturing.

Gas a solution?

In late April, ERCOT rolled out its New Era of Planning program focused on developing and implementing tools to better plan and meet future electricity needs. Areas include generation, load interconnection and transmission development.

In the last two decades, more than 75% of the capital that has been invested in Texas has been in renewables, Siegel said, adding prices have fallen.

Renewables’ intermittency, however, has increased reliance on battery storage and natural gas as regulators look for ways to account for volatility and get more projects off the ground.

In the meantime, “I think that the real solution is going to be gas,” Siegel said.

But a new rule issued by the Environmental Protection Agency, mandating CO2 emissions reductions from fossil-fired power plants, could limit natural gas’ role. Many new gas and existing coal plants will be required to reduce greenhouse gas emissions by 90% by 2032. The rule, which is being challenged in court, also includes carbon capture and sequestration requirements.

“We don’t think that technology has been proven. … One of the things that companies like Vistra have to tackle is how much investment and what type of investment to make with an uncertain regulatory environment,” Siegel said, “because that rule is going to be litigated. But it’s a final rule. And so, it’s difficult for us to go to our investors and say we want to invest in something that may have a very severe restriction imposed on it through the environmental regulation.”

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