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    Home»Utilities»U.S. Utilities Face Peak Demand Uncertainty With Data Center Boom
    Utilities

    U.S. Utilities Face Peak Demand Uncertainty With Data Center Boom

    July 1, 20252 Mins Read


    Electric utilities in the United States face a high degree of uncertainty over future revenues as the boom of AI data centers generates widely varying forecasts of peak demand in many areas across the country.

    U.S. power utilities are investing a record amount of money into transmission and grid connection, but current forecasts of AI-driven power demand vary so much that there is a massive margin of error, analysts and utility officials have told Reuters Events.

    The U.S. market faces “a moment of peak uncertainty,” according to Rebecca Carroll, Senior Director of Market Analytics at energy advisor Trio.

    The latest report from the U.S. Department of Energy (DOE) puts data center consumption at anywhere between 6.7% and 12% of total U.S. electricity by 2028.

    “The report estimates that data center load growth has tripled over the past decade and is projected to double or triple by 2028,” DOE said.

    However, there is a huge difference between double or triple growth in data center load.

    This has prompted utilities to demand clear demand estimates from data centers for future connections and power purchase agreements (PPAs), to reduce the risk of getting demand and/or prices wrong.

    So power developers are using hedging instruments and structured PPAs or battery storage offtake agreements to mitigate risk.

    U.S. power utilities are getting a lot of requests from Big Tech for new power capacity in certain areas.

    But these requests do not paint an accurate—or full—picture of the power needs of the technology giants because companies tend to inquire about data center power supply with at least three utilities in different areas. Of these three requests for new power capacity, only one will become a project for which agreements will be signed. Analysts and utilities cannot reliably say how much new capacity is needed, considering that one data center project pitches electricity supply requests to different utilities in different states.

    By Tsvetana Paraskova for Oilprice.com

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