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Burgeoning Power Demands and the Growing Impact of AI

The nation’s electricity demand is surging due to the rapid expansion of data centers, the re-shoring of manufacturing, shift to electrification, and economic growth. The rapid rise of artificial intelligence (AI), cloud computing, and data-intensive applications is driving unprecedented demand for electricity. Data centers, which power these technologies, are becoming one of the fastest-growing sources of electricity consumption in the U.S. According to a Dec. 2024 Department of Energy (DOE) report, data centers could account for 6.7-12% of total U.S. electricity usage by 2028, a dramatic increase from 4.4% in 2023. Total electricity use by data centers alone is projected to double or even triple to between 325-580 TWh by 2028, up from 176 TWh in 2023.

This phenomenal growth places immense pressure on the nation’s electric transmission grid, which must not only keep pace but also anticipate future needs. Expanding and modernizing transmission infrastructure is critical to maintaining reliability, preventing congestion, and ensuring that power can be delivered efficiently to these high-load facilities. Without proactive investment, grid bottlenecks could slow the growth of AI, cloud computing, and the broader digital economy.

Grid Reliability and Resilience

A reliable and resilient grid is essential for the smooth functioning of the economy. However, many parts of the grid are aging, with critical components exceeding their intended life expectancy. The American Society of Civil Engineers (ASCE) prepares an infrastructure report card every four years. In its new 2025 Infrastructure Report Card [PDF], the ASCE downgraded the U.S. energy infrastructure from a C- in its 2021 report to a D+. It called out the need to modernize grid components, noting that “70% of transformers are 25 years or older, 60% of circuit breakers are 30 years or older, and 70% of transmission lines are 25 years or older”.

Power outages and grid instability cost the U.S. economy billions of dollars annually. A DOE Smart Grid Report [PDF] estimated that power interruptions result in at least $150 billion in economic losses each year. The ASCE report noted that the “U.S. experienced two times more weather-related outages during the last 10 years (2014-2023)” than during the prior decade. Threats to the grid from more frequent severe weather, an onslaught of cyber and physical threats combined with increased power demand are compounding a system-wide strain. Investing in new transmission infrastructure is critical to hardening and enhancing grid reliability and resilience.

Modernizing the transmission system will not only strengthen the grid’s ability to recover from disruptions but improve efficiency. New lines are on average 55% more energy-efficient than older infrastructure. Each new or replacement project allows for modern engineering, updated safety standards and new technologies to be introduced, improving reliability, resilience and threat response. Upgrading the grid is a proactive, cost-effective approach to securing America’s energy future.

Grid modernization is a system-wide challenge. To develop a robust grid that can ensure reliability, resilience and provide the critical backbone necessary to support our national economic and security goals, we need all types of transmission to be built. Interregional, regional as well as local transmission projects add value in different ways. Each are essential to a modern grid. An analogy can be drawn with our national road network where local byways and off ramps that serve interstate and regional highways provide a beneficial role in providing good quality transportation access.

Economic Development and Consumer Savings

Transmission infrastructure investments are key drivers of economic growth. Large-scale projects generate jobs, stimulate local economies, and provide long-term benefits to communities. A WIRES report on planned transmission investments [PDF, 1.60 MB] found that an $83 billion investment in transmission infrastructure would:

• Contribute $42 billion to GDP during construction.
• Create approximately 442,000 well-paying jobs.
• Generate nearly $39 billion in direct local spending.

The economic benefits were not limited to the construction phase. The report also found that in the longer term, over the transmission assets’ lifecycle, the operations and maintenance of the transmission infrastructure would provide an annual GDP increase of $1.6 billion and create around 9,000 permanent jobs.

Consumers benefit from transmission as well, as the new infrastructure delivers a variety of benefits that lower power costs and improve reliability. Transmission opens access to lower cost generation and reduces grid congestion. Improving capacity sharing between regions also delivers benefits to consumers as well as economic benefits.

Another analysis, How Does Electric Transmission Benefit You, found that an Eastern Interconnect sample line designed to increase capacity between two regional markets delivered broad benefits to the economy, workers and consumers in the 3-4 years leading up to the project and in the first 15 years of operation, including:

• 4,200 new jobs added annually.
• A $710 million increase in GDP.
• $275 million in annual consumer savings on electricity bills.

Upgrading and modernizing the transmission grid is a cost-effective way to help bolster the economy and potentially save consumers billions of dollars. Investments made now to improve the grid will save money later, giving us an electricity supply that is affordable, efficient, and reliable.