US will face power shortages due to AI as early as 2025, industry regulator warns

The North American power grid is facing “critical reliability issues” as power production fails to keep up with growing demand from artificial intelligence systems. Rising electricity consumption over the next decade, coupled with the closure of coal-fired power plants, will place enormous strain on U.S. and Canadian grids and could exceed generating capacity, North American Electric Reliability Corporation (NERC) says.

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NERC is a non-profit organization regulated by the Federal Energy Regulatory Commission. The shortage could lead to rolling blackouts during periods of peak demand in both countries, according to NERC. The problem could potentially be exacerbated by delays in the commissioning of solar generation capacity, wind farms, storage capacity and hybrid resources. Some areas of the US could face shortages as early as next year.

NERC’s 2024 report suggests that AI’s growing energy demands could overload and unbalance the entire power grid. “We are in a period of profound change,” said NERC Director of Reliability Assessment John Moura. “We are seeing demand growth that we haven’t seen in decades and we see the pace [of demand growth] only accelerating.” The expected surge in demand will coincide with the phase-out of fossil fuel generation, with 115 GW of capacity planned to be shut down over the next 10 years.

Electricity demand has grown faster over the past year than at any time in the last two decades, according to NERC, amid massive construction of AI data centers and cryptocurrency mining, as well as the rise in popularity of electric vehicles and heat pumps. Instead of the projected 80 GW, peak summer demand will grow by 132 GW, or 15 percent, over the next decade. Peak winter demand will rise 18 percent to 149 GW, which is one and a half times higher than the previous forecast of 92 GW.

The International Energy Agency predicts that global electricity demand from data centers alone could exceed 1,000 terawatt-hours by 2026, double 2022 levels and equivalent to Germany’s total electricity needs.

Big tech companies are scrambling to find ways to meet growing energy demands, including striking deals to build new nuclear power plants and small modular nuclear reactors.