BNEF nearly doubled its forecast for US data center power demand

A new forecast from BloombergNEF says U.S. data centers could need 194 gigawatts of power capacity by 2035, nearly double what analysts expected as recently as December. That would mean data centers use about 20% of all U.S. electricity by the mid-2030s, up from under 6% today. The forecast keeps climbing because more projects, many run by companies new to the business, are entering the pipeline. But analysts caution these plans face real hurdles: labor and equipment shortages, slow grid hookups, and local opposition. Some counties are seeing packed public meetings where residents object to rezoning for these projects.

Fifteen states have considered temporary bans on new data center construction, and New York's governor recently signed the first statewide pause, giving regulators up to a year to write rules meant to protect utility customers, the environment, and the power grid. Despite the pushback, big tech companies plan to keep spending heavily, an estimated $700 billion this year among Amazon, Google, Microsoft, and Meta.

For homes, the relevant piece is the grid strain. Most data centers still plan to connect to the regular power grid rather than go fully independent, since running your own power plant is harder than it sounds. Many developers are instead building on-site gas plants as a stopgap while waiting for grid connections, and some of these gas projects have already run into performance problems. As this demand grows, it could affect local electricity capacity and rates, so it's worth keeping an eye on what your state and utility decide about data centers in your area.