Electric utilities across the United States are facing unprecedented demand as tech giants scramble to secure locations for new data centers, driven by the surging power requirements of artificial intelligence technologies.
A Reuters review of earnings calls from 13 major U.S. utility companies revealed that nearly half have been approached with requests from data center operators for electricity volumes that exceed their total current peak demand — the amount needed to supply all homes and businesses they currently serve. This highlights just how enormous the future energy needs of the data center boom may be.
Now, utilities are grappling with a crucial dilemma: how to scale their infrastructure quickly and efficiently to meet this explosive growth without overextending. Billions in new infrastructure investments have already been announced, with some companies doubling their five-year spending plans.
The stakes are high. Falling short could lead to an overstressed grid and increased risk of outages. Overbuilding, on the other hand, could result in consumers footing the bill for unused capacity.
To make matters more complicated, Big Tech firms are often shopping around — requesting bids from multiple utility providers within the same state or across state lines for the same project. This creates inflated projections and makes it difficult for power providers to know which projects will actually move forward.
“We're seeing a tidal wave of speculative projects, most of which lack clear details,” said Jon Gordon, director at Advanced Energy United, a clean energy industry group that includes large power consumers like data centers.
Because of this secrecy and redundancy, predicting future energy demand has become a moving target. “The standard data center playbook is to solicit bids from three companies per market,” explained James Richmond, CEO of energy systems firm e2Companies. “Only one wins — the rest are left with inflated forecasts that never materialize.”
An Avalanche of Requests
The scale of demand is staggering. In Texas, Sempra’s Oncor Electric, which serves the Dallas region, has received data center connection requests totaling 119 gigawatts — nearly quadruple the region’s peak electricity usage.
In Pennsylvania, utility company PPL reported over 50 GW in data center power requests, including at least 9 GW in advanced planning stages — a figure far exceeding its current 7.2 GW generation capacity.
Utilities like Oncor and PPL are being cautious. They only factor data center projects into spending plans after formal agreements are signed and financial backing — such as letters of credit or guarantees — is secured.
Meanwhile, in the Kansas-Missouri region, Evergy reported its potential data center demand pipeline has almost doubled to more than 11 GW as of late 2024, surpassing its projected system-wide peak for 2025.
State governments are starting to take action. In Pennsylvania, officials are exploring the idea of establishing a centralized “clearinghouse” to track and manage data center power requests, aiming to bring more clarity to the rapidly evolving landscape.
“This is something we’re taking a very close look at,” said Jacob Finkel, Deputy Secretary of Policy for Governor Josh Shapiro, during a recent industry event.
As tech companies expand their digital infrastructure and AI applications continue to scale, the U.S. energy sector is entering uncharted territory — one where innovation, coordination, and adaptability will be essential to keeping the lights on.