Rising Commercial Electricity Demand In The US: Impact Of Data Center Growth

Commercial electricity demand in the United States has shown notable recovery since the pandemic, with sales to commercial customers in 2023 surpassing 2019 levels by 1%, totaling 14 billion kilowatthours (BkWh). This growth, however, is concentrated in states experiencing rapid expansion of large-scale computing facilities, particularly data centers.

Virginia and Texas have seen the most significant increases in electricity demand, adding 14 BkWh and 13 BkWh respectively between 2019 and 2023. In these states, the proliferation of data centers, attracted by factors like robust fiber infrastructure and favorable operating costs, has been a primary driver of increased electricity consumption. Notably, Virginia has seen the connection of 94 new data facilities since 2019, supported by extensive fiber networks and subsea cables.

Similarly, North Dakota has experienced a remarkable 37% relative increase in electricity demand, largely due to the establishment of major computing facilities. Western states like Arizona and Utah have also contributed to the national trend with robust growth in commercial electricity consumption.

Conversely, states such as New York, Illinois, and California have seen flat or declining electricity demand from the commercial sector compared to 2019 levels.

The Short-Term Energy Outlook (STEO) forecasts an upward trajectory for commercial electricity demand through 2025, particularly in regions with significant data center development. Forecasts have been revised upwards for the South Atlantic and West South-Central census divisions, which together account for a substantial portion of U.S. commercial electricity demand. Specifically, the South Atlantic division is expected to see 5% growth in 2024 and 2% in 2025, while the West South Central division anticipates 3% growth this year and 1% next year.

Overall, national sales of electricity to the commercial sector are forecasted to grow by 3% in 2024 and 1% in 2025. Continued developments in data centers will continue to shape these forecasts, with ongoing evaluations planned as more information becomes available.