The math on America's power grid is getting uncomfortable. Data centers are gobbling up electricity faster than utilities can build out transmission capacity, and according to new research from BloombergNEF, even record-breaking infrastructure spending won't close the gap.
Two reports released Monday paint a picture of accelerating demand colliding with sluggish supply. BloombergNEF now expects U.S. data center power demand to hit 106 gigawatts by 2035—a 36% jump from what they predicted just seven months ago. Meanwhile, grid investment is setting records but still can't keep pace with the bottlenecks piling up.
AI Is Rewriting the Power Demand Playbook
The surge isn't just about more data centers. It's about bigger, hungrier ones. Of nearly 150 new projects added to BloombergNEF's tracker this year, almost one-quarter exceed 500 megawatts. That's more than double last year's share. The culprit? AI workloads that demand massive compute density and can't tolerate power interruptions.
This isn't your typical cloud storage facility. These are power-hungry operations that need electricity flowing 24/7, and they're reshaping regional energy markets in real time.
Two Giant Grids Are Already Feeling the Squeeze
PJM and ERCOT, two of the country's largest power markets, are showing early warning signs. PJM operates across 13 states from New Jersey to Illinois, serving nearly 65 million people. BloombergNEF forecasts data center capacity there could reach 31 GW by 2030—nearly matching the 28.7 GW of new generation the Energy Information Administration expects over the same period.
ERCOT, managing about 90% of Texas, faces similar pressure. The report warns that reserve margins could fall into "risky territory" after 2028 as long-term power supply lags behind accelerating demand from AI and industrial growth.
Geography is shifting too. Northern Virginia's data center market, long the industry's epicenter, is hitting saturation. Development is spreading into central and southern Virginia. Georgia is expanding beyond metro Atlanta as land and power availability tighten. Texas stands out as developers convert former crypto-mining sites into AI facilities near major population centers and fiber routes.
Record Spending Meets Stubborn Bottlenecks
BloombergNEF's Grid Investment Outlook 2025 found that global grid capital spending will exceed $470 billion this year, with the U.S. contributing $115 billion—more than any other country.
Yet even with double-digit growth, the usual suspects keep slowing things down: supply-chain constraints, permitting delays, labor shortages. Connection queues driven by data centers are growing rapidly, and they represent a major structural challenge that money alone won't solve.
"With data centers and industrial electrification driving sharp increases in power demand, investors need to factor in how essential timely grid expansion is for not only connecting new demand but also connecting all of the generation we will need to ensure a secure and reliable supply to this demand after over a decade of stagnation," said Peter Wall, Head of Grids Research at BloombergNEF.
Translation: We spent a decade underinvesting in the grid, and now AI is forcing us to play catch-up at the worst possible time.