Electric Demand Growing Fastest in States with Data Center Development

Electric use in the U.S. is expected to rise in the next decade, and commercial buildings are expected to contribute to that increase.

Commercial buildings account for about 35% of U.S. energy consumption, and a recent U.S. Energy Information Administration (EIA) report found that commercial sector use has rebounded from pandemic levels, reaching 14 billion kilowatt hours (BkWh) in 2023. That is 1% more than recorded in 2019. Now, a new EIA analysis has determined that the growth in commercial demand is focused in several states experiencing rapid development of data centers, which use large amounts of electricity.

The 2023 Long-Term Reliability Assessment (LTRA), published in December by the North American Electric Reliability Corporation (NERC), found that electric demand over the next decade is expected to increase markedly, a dramatic shift from the flat or declining demand trends of the past two decades as more energy-efficient products have permeated the market.

The trend reversal is primarily driven by a move toward electrification, which is seen as a way to lower greenhouse gas emissions if the electricity is produced with clean sources of energy. Some of the largest contributors to increasing demand are the rise of electric vehicles (EVs) and the surge of data centers being brought online across the continent.

The EIA report added more evidence of the contribution of data centers, determining that the growth in commercial electricity demand is concentrated in a few states that are experiencing the rapid development of data centers and other large-scale computing facilities.

Data centers are large warehouse-type facilities that house computer and cloud infrastructure for running applications and delivering and storing information. They are one of the most energy-intensive building types, using 10–40 times more energy per square foot than the typical office building and accounting for almost 2% of the electricity use in the United States, according to the EIA.

Electricity demand has grown the most in Virginia and Texas, both of which have seen exponential growth in the number of data centers. Virginia, the top state, has become a major data center hub with 94 new facilities since 2019. Texas also has seen a high number of data centers and cryptocurrency mining operations built due to its low electricity prices.

Commercial electricity demand in the 10 states with the most growth increased by 10%, or 42 BkWh, between 2019 and 2023, the EIA found. Demand in the other 40 states decreased by 3%, or 28 BkWh, over the same period.

The EIA is forecasting that commercial sector electric consumption will increase by 3% this year and another 1% in 2025, but the report notes that data center development is evolving rapidly and that the agency will re-evaluate its forecasting as more information is received.