Energy Shots #117:

2014-2028 Data Center Energy Demand

This week, the Lawrence Berkeley National Laboratory (LBNL) released its updated 2024 Data Center Energy Usage Report, a Department of Energy-sponsored bottom-up forecast model for US data center electricity consumption.

LBNL’s Findings:

• US data centers consumed approximately 4.4% (176 TWh) of all U.S. electricity supplied in 2023, up from an estimated 1.9% share in 2018.

• LBNL estimates US data centers will consume an additional 149-404 TWh of electricity by 2028 as data center developers deploy more resource-intensive hyperscale facilities for AI-related inference and training.

• LBNL’s low-end total data center electricity consumption estimate of 325 TWh by 2028 translates to an estimated 6.7% of total US electricity demand. The lab’s high-end estimate of 580 TWh translates to an estimated 12% share of total US electricity demand in 2028.

• LBNL’s modeling shows data center electricity consumption has grown at an accelerated pace since its 2016 report. Data center electricity demand grew at a CAGR of approximately 7% between 2014 and 2018, jumping to a CAGR of 18% between 2018 and 2023. LBNL forecasts this rate holding between 13% and 27% between 2023 and 2028.

Translating LBNL’s Forecasts to Energy Markets

Data center power reliability requirements and infrastructure lead times are an important variable to consider when translating data center load growth to generation resource consumption— namely, hyperscale data centers typically require steady-state, 24/7/365 electricity.

The known intermittency limitations of variable renewable energies like wind and solar mean these resources are ill-equipped to meet emerging data center load growth. While battery technology advancements could offset renewables’ intermittency problem, limited power storage capacity (2hr/4hr) remains a significant adoption hurdle for the data center industry.

The resurgence in investment interest in nuclear generation reflects the data center industry’s long-term ambitions. However, as detailed in previous reports on nuclear’s undeveloped domestic supply chain and slow deployment speeds, the odds of meeting pre-2030 load growth with nuclear generation are low.

As a result, near-term data center load growth at the rates outlined in LBNL’s forecasts will likely place additional demands on natural gas-fired generation units capable of supplying reliable, steady-state electricity.

We can approximate the knock-on effects of additional gas-fired generation on domestic natural gas demand using LBNL’s forecasted data center electricity demand growth through 2028 and the EIA’s historical power generation data.

• Low-end forecast by 2028: +149 TWh from 2023 levels

• High-end forecast by 2028: +404 TWh from 2023 levels

As shown below, a scenario where natural gas-fired generation supplies 40% of LBNL’s new data center load translates into an approximate increase in US natural gas demand of +1.2 Bcf/d for LBNL’s low-end estimate and +3.2 Bcf/d for LBNL’s high-end estimate.

• Since gas-fired units supplied over 43% of total US electricity consumed in 2023, these values provide a reasonable ‘base case’ scenario for LBNL’s estimates.

• A more aggressive scenario where gas-fired units meet 80% of new data center electricity demand due to stringent reliability requirements translates into additional natural gas demand of +2.3 Bcf/d to +6.3 Bcf/d by 2028.

High Uncertainty

LBNL’s data center demand modeling retains significant uncertainty— the lab’s 2016 forecasts substantially underestimated data center electricity consumption growth rates and required upward revisions of more than 25 TWh to the 2018-2020 period. This year’s forecasts could similarly underestimate or overestimate growth rates.

A Closer Look At LBNL’s Forecasts:

See you next Sunday.

ES.

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