The infrastructure underpinning the digital world, data centers, is poised for an unprecedented surge in electricity consumption, with new projections indicating a nearly 300% increase in demand over the next decade. By 2035, these digital nerve centers are expected to draw an astonishing 106 gigawatts of power, a dramatic leap from the approximately 40 gigawatts they consume today. This monumental growth, detailed in a recent report from BloombergNEF, signals a transformative shift in global energy landscapes and presents significant challenges for power grids worldwide.

The Digital Engine’s Growing Appetite

Data centers are the fundamental factories of the information age, housing the servers, storage systems, and networking equipment that process, store, and transmit the vast amounts of data generated by our increasingly digital lives. From streaming movies and social media interactions to complex scientific simulations and financial transactions, virtually every online activity relies on these facilities. Their relentless expansion is driven by a confluence of factors, including the global adoption of cloud computing, the proliferation of mobile devices, the Internet of Things (IoT), and the escalating demand for data storage and processing across all sectors.

Historically, data processing began in isolated server rooms within corporate offices. As technology advanced, the need for specialized, secure, and scalable environments led to the development of dedicated data centers. The early 2000s saw the rise of colocation facilities, where multiple companies could house their equipment. This evolved into the era of hyperscale data centers, pioneered by tech giants like Amazon, Google, and Microsoft, which built massive, purpose-built facilities to support their burgeoning cloud services. These facilities leverage economies of scale and advanced cooling technologies to manage hundreds of thousands of servers efficiently. The current forecast suggests a rapid acceleration of this trend, moving towards even larger, "gigascale" operations.

AI: The New Energy Accelerant

A primary driver behind this escalating power demand is the explosive growth of artificial intelligence (AI). Technologies like generative AI, large language models, and advanced machine learning algorithms require immense computational resources. Training these sophisticated AI models involves processing colossal datasets, a task that demands specialized hardware, primarily graphics processing units (GPUs), which are significantly more power-intensive than traditional central processing units (CPUs). The BloombergNEF report highlights that AI training and inference alone are projected to account for nearly 40% of total data center compute by 2035. This increased computational load is also expected to boost the overall utilization rate of data centers, from an average of 59% today to 69%, indicating that existing infrastructure will be working harder than ever before.

The societal and cultural impact of AI’s rapid development is already profound, transforming industries from healthcare to entertainment and finance. While AI promises groundbreaking innovations and efficiencies, its energy footprint is becoming a critical consideration. The quest for faster, more capable AI models translates directly into a demand for more powerful hardware and, consequently, more electricity. This creates a feedback loop: as AI becomes more integrated into daily life and business operations, the underlying digital infrastructure must expand to support it, further intensifying its energy requirements.

The Rise of Hyperscale and Rural Migration

The sheer scale of planned data center construction is a significant contributor to the projected energy surge. Currently, only a small fraction—about 10%—of data centers consume more than 50 megawatts (MW) of electricity. However, the paradigm is rapidly shifting. Over the next decade, the average new facility is anticipated to draw well over 100 MW. Furthermore, a substantial portion, nearly a quarter, of these new developments will exceed 500 MW, with a select few even surpassing the 1 gigawatt (GW) mark. These colossal facilities represent an entirely new class of digital infrastructure, necessitating unprecedented levels of power supply.

This expansion is also reshaping the geographical landscape of data center deployment. As prime locations near urban centers become scarce and prohibitively expensive, developers are increasingly turning to more rural areas. These regions often offer ample land, lower property costs, and, crucially, access to existing high-voltage transmission lines or the potential for new power generation facilities. This migration to rural landscapes, while offering practical advantages for developers, introduces new challenges for local communities and existing grid infrastructure, requiring significant investment in grid upgrades and power supply. The economic benefits, such as job creation and increased tax revenues, are often welcomed by these communities, but they must be carefully balanced against potential strains on local resources and environmental considerations.

A Cascade of Investment and Infrastructure Strain

The race to build and expand these power-hungry facilities has fueled an investment boom. Global investment in data center infrastructure has soared to an estimated $580 billion this year, a figure that now surpasses the world’s spending on finding new supplies of oil. This staggering sum underscores the strategic importance placed on digital infrastructure in the global economy, indicating that the foundational elements of the internet are now considered as critical, if not more so, than traditional energy resources.

The rapid pace of development has necessitated frequent revisions of energy forecasts. The BloombergNEF report itself represents a significant upward adjustment from a previous document published just months earlier in April. This revision was prompted by a surge in newly announced projects, many of which are still in their early planning stages. The report notes that, with an average seven-year timeline for such large-scale projects to come online, these early-stage developments disproportionately influence the long-term forecast. Indeed, the volume of early-stage projects has more than doubled between early 2024 and early 2025, signaling an accelerating pipeline of future demand.

Regulatory Headwinds and Grid Reliability

The implications of this burgeoning demand are particularly acute for regional power grids. In the United States, significant new capacity is being planned for states within the PJM Interconnection region, including Virginia, Pennsylvania, Ohio, Illinois, and New Jersey, as well as Texas’s ERCOT grid. PJM Interconnection, a regional transmission organization (RTO), is responsible for operating the electrical grid across these states and parts of others. RTOs play a critical role in ensuring grid reliability, managing electricity markets, and planning for future transmission needs.

However, the rapid influx of data center load has placed PJM under intense scrutiny. Monitoring Analytics, the independent market monitor for PJM, recently filed a complaint with the Federal Energy Regulatory Commission (FERC). The complaint asserts that PJM has the authority and the obligation to authorize new data center connections only when the grid possesses adequate capacity to serve them reliably. Monitoring Analytics explicitly stated, "As part of its obligation to maintain reliability, PJM has the authority to require large new data center loads to wait to be added to the system until the loads can be served reliably." The organization further suggested that PJM has the power to create a "load queue," effectively prioritizing grid connections based on capacity availability.

Moreover, Monitoring Analytics contends that data centers are a direct contributor to the elevated electricity prices currently observed within the PJM region. The organization criticized PJM’s "failure to clarify and enforce its existing rules and to protect reliable and affordable service in PJM" as "unjust and unreasonable." This regulatory challenge underscores a growing tension between the tech industry’s rapid expansion and the inherent limitations and planning cycles of existing energy infrastructure. The outcome of such regulatory actions could significantly impact the pace and location of future data center development, potentially forcing a more coordinated approach between energy providers and large-scale consumers.

Sustainability in the Digital Age

Beyond grid capacity and cost, the environmental footprint of data centers is a mounting concern. The massive increase in electricity consumption translates directly into a higher demand for power generation, which, depending on the energy mix, can lead to increased greenhouse gas emissions. While many major tech companies have committed to powering their data centers with 100% renewable energy, the sheer scale of the forecasted demand presents a significant challenge for renewable energy deployment. Ensuring that new data centers are integrated with clean energy sources requires substantial investment in solar, wind, and other renewable technologies, as well as robust transmission infrastructure to deliver that power.

Furthermore, data centers are significant consumers of water, primarily for cooling their vast arrays of servers. As facilities grow larger, so does their water footprint, raising concerns about local water scarcity, particularly in regions already experiencing drought conditions. Innovations in cooling technologies, such as liquid cooling and more efficient air management systems, are being explored, but these advancements must keep pace with the exponential growth in computational power and density.

Navigating the Future of Digital Power

The forecast of a near-tripling of data center energy demand by 2035 highlights a critical juncture for both the technology and energy sectors. The digital transformation, propelled by AI and cloud computing, is undeniably shaping our future, but its energy requirements cannot be underestimated. Addressing this challenge will require a multi-faceted approach involving strategic planning, significant infrastructure investment, and innovative policy solutions.

This includes accelerated development of new, clean energy sources, smart grid technologies that can dynamically manage fluctuating loads, and advanced energy storage solutions. It also necessitates closer collaboration between data center developers, utility companies, and regulatory bodies to ensure that growth is sustainable, reliable, and does not unduly strain existing resources or lead to untenable energy costs for consumers. The coming decade will test the adaptability of our energy infrastructure as it strives to meet the insatiable appetite of the digital age.