The new report from construction firm Black & Veatch has revealed both opportunities and gaps in electricity grid planning in the US as demand from AI and cloud computing-driven data centres continues to rise.  

The study suggests that the US electricity sector ‘requires sharper tools, bolder thinking and faster decisions to meet this unprecedented demand for infrastructure and market speed’. Only 19% of survey respondents expressed strong confidence in forecasting the increase for power loads, it adds.

The report reveals a sector at an ‘inflection point, where meeting surging electricity demand has overtaken emissions reduction as the primary focus point for utilities’. Driving this demand are data centres, which have construction timelines of just 18 months – far shorter than the six years typically required to develop supporting utility infrastructure.

‘The electric industry has always been full of changes, but never at the speed it is now,’ comments Todd Edsall, President of Power Providers for Black & Veatch. ‘Meeting the demands of AI and data centres requires not just new technology and incremental improvements, but building adaptive, intelligent systems from completely new ways of thinking and tight collaboration across the industry.’

The report shares insights from 500 US-based energy stakeholders. Among the findings, grid digitalisation is seen to be exposing utilities to escalating cyber threats as device networks expand into the millions, with 40% of respondents now prioritising cybersecurity training over investing in new security tools in recognition that technology alone cannot address human vulnerabilities.

Over half (53%) of utilities cite limited available power as the top obstacle to getting data centres online, with transmission (47%) and substation upgrades (46%) close behind.

Respondents are also prioritising practical, proven strategies like backup systems (40%), vegetation management (30%) and freeze protection (27%) to address climate impacts. At the same time, nuclear energy has again gained ground as a potential investment, with 47% expressing interest in small modular reactors (SMRs).

The report also notes that federal climate policy shifts are not reshaping utility plans, with 34% of respondents expecting no impact, and 47% saying they will stick to current strategies even if regulations ease.

US power demand rises but prices won’t peak until 2030

Meanwhile, Rystad Energy suggests that although rising demand from data centres is seen as the culprit for a 13% rise in US retail power prices since 2022, the full price impact won’t be seen until 2030, when a wave of data centre infrastructure developments reach completion and more centres come online.  

Rystad predicts that meeting this inevitable increase in energy demand will be ‘difficult’ due to ‘severe supply-side bottlenecks, including generator retirements, lengthy interconnection timelines and project viability risks’.

‘Retail power prices reflect the mounting financial costs of capacity charges, transmission and distribution (T&D) fees, and system maintenance costs, all of which have been trending upward as grids adapt to rising data centre demand and renewables integration’, comments Marina Domingues, Vice President and Head of US New Energies.

While nominal wholesale power prices have remained relatively stable since 2023, retail rates have surged, reports Rystad. ‘Retail consumers are facing astronomical increases in electricity costs, paying 300% premiums for power compared to wholesale premiums at around 120%, depending on the region,’ it says.  

The most affected markets are those requiring extensive T&D infrastructure upgrades to accommodate integration of variable renewable sources, such as the New England Independent System Operator (NE-ISO), California ISO (CAISO) and New York ISO (NYISO). These market regions face compounding pressure from rising electrification rates and operational challenges introduced by intermittent generation, according to Rystad.

While traditional sectors still dominate US consumption, data centres are rapidly emerging as a core driver of structural load growth, fundamentally altering the load profile with sharper peaks and increased demands on grid flexibility, notes the analysis. Residential and industrial loads are expected to remain the bulk consumers, but data centre demand is projected to expand dramatically, rising from negligible levels in the early 2020s to 12% of total demand by 2030 and reaching 21% by 2050.

‘The widening gap between rising retail power prices and flat wholesale power prices signals a growing divergence of energy and reliability pricing across the US. While this shift is still in its infancy, upward cost pressures related to maintaining resource adequacy and system capacity will become more prevalent in consumer bills, especially where data centres are being constructed near residential areas,’ adds Domingues.