A new BloombergNEF report forecasts that data centers in the U.S. will consume four times more electricity by 2035, accounting for about one-fifth of the nation’s total power generation. This surge is primarily driven by the growing demand for AI compute power, with data center capacity expected to reach nearly 200 gigawatts within the next decade. The U.S. is projected to dominate this expansion, hosting 64% of AI chip power demand by 2033, as a large portion of new capacity is dedicated to AI training and inference.

The electricity consumption projections are considerably more optimistic than previous estimates. BloombergNEF’s current forecast for 2035 is 83% higher than what it predicted just last December. Similarly, the Electric Power Research Institute (EPRI) and S&P Global have also raised their data center power demand estimates. These upward revisions reflect rapid data center development across the country and an intensifying strain on existing electrical grids, particularly in key regions like the PJM Interconnection, spanning Virginia to Illinois, where data centers could consume 34% of electricity by 2035.

Grid operators are already grappling with the influx of new data center connections. PJM has faced challenges managing its capacity, resulting in a pause on new grid connection requests for several years. Although the queue reopened earlier this year, the grid remains under significant stress, prompting utilities like American Electric Power to consider exiting the interconnection. Electricity prices on PJM have surged by 76% over the past year due to this supply-demand imbalance, but demand from data centers continues to grow, representing a substantial portion of capacity auction charges.

Globally, data center power demand is expected to drive an additional 1,935 terawatt-hours of electricity use by 2033, nearly matching India’s current annual consumption. The dramatic increase in energy needs is closely tied to AI adoption trends, suggesting that even with concentrated U.S. leadership in AI compute, data center expansion will persist worldwide. This trend poses significant challenges and opportunities for energy infrastructure and sustainability efforts moving forward.