A study conducted by PA Consulting for National Electrical Manufacturers Association (NEMA), “A Reliable Grid for an Electric Future,” predicts that growth in electricity demand in the United States will be driven by data centers and e-mobility, along with industrialization and connectivity.
The report forecasts a 300% rise in energy consumption by data centers and a 9,000% for electric mobility and charging.
NEMA held a webinar with speakers from Southwire, ABB, nVent and S&C Electrical, all companies supplying products and technologies directly involved in solving the challenges in load growth. The four executives remarked about the unprecedented growth outlined in the NEMA study and the need to embrace technology and policy solutions to help meet the demand.
“America’s electrical system will face dramatic changes over the next 25 years,” said Debra Phillips, NEMA president and CEO. “As electricity demand is set to rise for the first time in decades, we need an all-above-approach that focuses on investing in innovative technologies and prioritizing policy and regulatory certainty that will help us create the reliable and affordable energy system of the future.”
Artificial intelligence (AI) and increased cloud storage are giving rise to the growth in demand, with AI expected to account for one quarter of data center load by 2030. The report notes that the pace and scale can vary with advancements in technology, shifts in IT strategies as well as by region. Over time, the demand will be driven by electric vehicles.
NEMA estimates that approximately 55 million light-duty EVs will be on the road by 2035, while electric vehicle sales are expected to make up 30% of new car sales in the states that have adopted California’s Zero Emissions Vehicle regulations. According to the California Air Resources Board, as of June 2024, 18 states had adopted some form of the California mandate.
The generation mix
To meet the growing load demand, the report notes that the generation mix is going to shift, with the renewables leading the way. Phillips pointed out that an “all-of-the-above strategy” is increasingly important.
Powering the load of the future will be a mix that, according to the report, includes fossil fuels, clean energy, renewables and storage. The fossil fuel mix is made up of gas, coal, oil and combined cycle. Clean energy includes nuclear and hydroelectric, while renewable energy is made up of solar and wind.
Forecasts for new installed capacity vary, and NEMA recommends that new renewable generation is essential to meet total demand requirements.
The changes in energy consumption will vary by region, first driven by data centers and later followed by EV adoption. The PJM and ERCOT regions (mid-Atlantic and Texas) will experience the fastest growth due to data center location. CAISO and the Southeastern U.S. will have slower growth due in part because it will have fewer data centers but also because these states have “mature energy efficiency initiatives,” the report states.
Using 2035 as a baseline and projecting out to 2050, NEMA sees EV growth as driving large changes in demand growth in the West (excluding CAISO). Earlier fast-growing regions will slow down as the market for data centers will be saturated in those areas.
Handling the load
NEMA identifies four ways of handling the load: modernize the wires, reduce consumption, shift consumption and store supply.
Phillips noted that it takes time for new generation sources to come online, and therefore it’s important to do what we can with our existing infrastructure. The report identifies technologies are market ready to help transmit more over existing lines, optimize data centers for efficiency, solve intermittency issues and flatten the peak demand curve.
Rich Stinson, president and CEO of Southwire, a Chicago-based wire and cable manufacturer, identified “chokepoints” to meeting the unprecedented demand growth:
- aging grid
- permitting challenges around transmission
- supply chain challenges
- lack of skilled labor
Uncertainty
Questions remains about the effects of tariffs on the electrical industry. Phillips said that NEMA supports the new administration’s priorities on bringing manufacturing back to the U.S. and building grid reliability.
However, because the U.S. shares a common electrical system with Canada and Mexico, “we want to continue to see a focus on the North American trade zone,” she said. “We want certainty, predictability and we want our U.S. enterprises to remain competitive.”
Manufacturing tax credits within the Inflation Reduction Act are also important, Phillips noted. “Those have been really important in building out all-of-the-above grid infrastructure that we’re going to need for decodes to come,” she concluded.
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