What we know
To meet US decarbonization goals, we need to build electric transmission lines at a breakneck pace to connect new, clean sources of electricity to the grid, and interconnect different grids so that demands and intermittent supply sources can be better matched. Princeton University has estimated that we will need to more than double the rate at which we historically add transmission capacity (about 1%/year), and that if we stay at our historical pace, we risk losing roughly 80% of the carbon reduction benefits that the Inflation Reduction Act (IRA) is expected to deliver (repeatproject.org).

What we’re learning
The analyses that supported IRA, and essentially all analyses done by utilities as recently as 2 or 3 years ago, didn’t fully account for how much more electricity we will need due to rapidly rising demand from data centers. Utilities and regional transmission organizations’ forecasts for data center growth began to appear in earnest in 2023, well after IRA analyses were done. A typical data center not long ago might have needed 10s of megawatts (MW) of power; 100–200 MW is common and reports of “hyperscalers,” with power needs upwards of 800 MW to 1 gigawatt of power are percolating across the country. These “hyperscalers” are being driven by our increasing demand for streaming, apps on our phones, and artificial intelligence (AI) training needs and AI-driven applications.

A 2024 Electric Power Research Institute whitepaper states that “AI queries are estimated to require 10x the electricity of traditional Google queries.” (Powering Intelligence: Analyzing Artificial Intelligence and Data Center Energy Consumption) Electric Power Research Institute estimates that by 2030, data centers will account for huge power demands in some states, led by Virginia (where scenarios data centers will consume 29% to 46% of load and from over 40 terawatt-hours /year to nearly 90 terawatt-hours /year), but with other states such as Texas, California, Washington, and New York following closely behind. All that will require substantial new transmission, above and beyond what’s needed to add clean power to the grid for decarbonization alone.

To find out what we are learning, what is new and where it will all lead, download the Policy Alert here. 

Contact:

Michael Leifman - Partner, Climate Change