Power companies plan to invest over $1.1 trillion by 2030 to cope with rising energy demands, as reported by the Edison Electric Institute.
In 2024, the electric sector witnessed a significant boost, with 52 Gigawatts (GW) of new generating capacity coming online - a 11% increase from the previous year and a staggering 48% increase from 2022 [1]. This growth trend is set to continue, according to a recent report [2].
The solar energy sector experienced a remarkable surge, with solar capacity installations increasing by 63% to 32,486 Megawatts (MW) in 2024, marking the fastest annual growth since 2020 [1]. On the other hand, wind capacity additions decreased from 6,343 MW in 2023 to 4,132 MW in 2024, suggesting a maturing technology after decades of rapid growth [1].
The rise in electricity demand, particularly from data centers, has been a major driving force behind this increased investment. Much of the investment will be directed towards meeting this growing demand [2]. However, not all proposed data centers will ultimately be built, experts agree [3].
Natural gas-fired power generation is forecasted to provide a substantial portion of the new capacity needed to support this growth. The increase in proposed investments in gas capacity by U.S. electric utilities from 2023 to 2024 is largely driven by this need [2]. This marks natural gas's lowest increase since 2020 [1].
According to a McKinsey study, data center demand is predicted to rise about 20% annually from 2023 to 2030, from 60 GW today to between 170 GW and 220 GW [1]. Depending on factors, data center demand could even reach 300 GW, according to the same analysis [3]. Other sources estimate that U.S. data center electricity consumption could rise by as much as 130% by 2030, with data centers consuming 11% to 15% of total U.S. power generation by then compared to 6% to 8% in 2024 [3][5].
Investor-owned U.S. electric utilities are planning to invest over $1.1 trillion in the 2025-2029 period [2]. The electric utility sector's capital expenditures are higher than any other sector in the U.S. economy [6].
The Edison Electric Institute predicts that the sector will remain committed to making investments needed to strengthen America's energy security while ensuring reliable, affordable energy [7]. Factors contributing to this commitment include increased electrification of transportation, manufacturing reshoring, and strong economic development across many service territories [7].
In conclusion, the electric sector is experiencing a surge in investments due to the growing demand from data centers and AI-related loads. Natural gas-fired power is a key part of utilities’ plans to ensure supply reliability amid grid interconnection and reliability challenges. Data center electricity demand is predicted to increase by approximately 20% annually from 2023 to 2030, potentially doubling or more during this period.
Science and technology are playing significant roles in the surging investments in the electric sector. The rise in demand from data centers, particularly from AI-related loads, is driving this growth, with experts predicting a 20% annual increase in data center electricity demand from 2023 to 2030 [1,3]. This trend is expected to continue, withtech-heavy sectors such as environmental science and finance anticipating increased investment to meet this growing demand [2,6].
