The increase in energy demand in the United States, driven by artificial intelligence, poses challenges to the grid flexibility and affordability, prompting the need for reforms to support clean energy goals.
Rising Energy Demand and AI’s Growing Impact
In the United States, energy demand is projected to grow 13% to 15% annually for the rest of the decade, according to McKinsey, Boston Consulting Group, and S&P Global. This surge, which marks a significant increase compared to previous decades, is attributed largely to artificial intelligence (AI). AI processing, including training models and generating large language model responses, consumes substantial amounts of electricity. As more sectors shift towards electric grid power, including vehicles and manufacturing, the strain on the grid intensifies.
Compounding the demand surge is the national push for decarbonization, necessitating the grid’s flexibility to manage spikes in usage. Utilities increasingly rely on expensive peaker plants, which drives up costs for consumers. A 15% increase in demand can lead to a proportionally higher rise in electricity prices, potentially doubling household energy costs.
Concerns are mounting over the U.S. grid’s capacity to meet this demand, risking blackouts and brownouts, reminiscent of past incidents in Texas (2021) and the East Coast (2003). The Biden administration’s Federal-State Modern Grid Deployment Initiative aims to address these challenges, but existing bureaucratic processes hinder rapid development. Approval wait times for new power generation can extend up to five years, delaying critical infrastructure projects. National reforms, such as the proposed Streamlining Interstate Transmission of Electricity (SITE) Act, are needed to ensure a robust, reliable grid that can support AI and clean energy goals.
