EIA projects record US data center power use amid AI and crypto boom

The EIA forecasts rising US electricity demand, reaching 4,283 billion kWh in 2026, driven primarily by data centers and commercial sector growth, which is expected to increase 3% in 2025 and 5% in 2026. While natural gas's share of power generation is projected to decline from 42% in 2024 to 40% by 2026 due to higher prices, coal and renewable energy sources are expected to compensate for the difference, with data centers potentially consuming 12% of US power by 2028.

Analysis

The US Energy Information Administration (EIA) projects a significant and sustained increase in US electricity demand, primarily driven by the expanding power needs of data centers. Demand is forecast to rise from a record 4,097 billion kilowatt hours (kWh) in 2024 to 4,193 billion kWh in 2025 and further to 4,283 billion kWh in 2026. This growth is particularly pronounced in the commercial sector, where consumption is expected to increase by 3% in 2025 and 5% in 2026, an upward revision from previous forecasts averaging 2% annually, explicitly attributed to data center expansion. Consequently, total US electricity generation is anticipated to rise by 1% this summer compared to 2024. The generation mix is also set to evolve; while natural gas's share is expected to decrease from 42% in 2024 to 40% in 2025 and 2026 due to higher prices, this shortfall is projected to be met by increased generation from coal, solar, and hydro. Coal's share is anticipated to hold at 16% in 2025 before declining to 15% in 2026 as renewable energy sources expand. Underscoring the scale of data center impact, a Department of Energy (DOE) report indicated that data centers consumed 4.4% of US power in 2023, with a potential to reach 12% by 2028, fueled by the AI boom's demand for power-intensive server racks. Globally, the International Energy Agency (IEA) echoes this trend, forecasting data center consumption to more than double from 415TWh in 2024 to 945TWh by 2030.

Key Decisions for Investors

• Investors should consider opportunities in companies involved in electricity generation, transmission, and distribution infrastructure, given the EIA's forecast of sustained demand growth driven significantly by data centers.
• The projected shift in the energy generation mix, with natural gas potentially ceding share to coal in the short term and renewables longer term, warrants a careful evaluation of investments across different fuel source dependent utilities and power producers.
• Given that data centers could consume up to 12% of US power by 2028, companies specializing in energy-efficient solutions for data centers and those developing or deploying renewable energy sources are likely to see increased demand.