The Looming Electrical Power Shortage

by Steve Goreham at

People in developed nations take abundant electricity for granted. When asked where electricity comes from, most will point to their wall outlet. But many states in the US are headed for a serious and prolonged shortage of electrical power not seen in decades, driven by rising demand from the artificial intelligence revolution and mandates to adopt green energy.

For 20 years, US electrical power policy has been dominated by efforts to try to “mitigate” global warming, believed to be caused by human greenhouse gas emissions. In 2021, President Joe Biden called for achieving a 100% carbon-free electric sector by 2035. Twenty-three states have enacted statues or issued executive orders to achieve Net Zero electricity generation by 2050.

Because of Net Zero mandates, US grid operators spent the last two decades replacing coal-fired power plants with natural gas plants, wind turbines, and solar installations. More than 200 coal plants have been closed, reducing electricity output from coal by almost 60% since 2007. From 2000 to 2023, wind and solar output rose from near zero to a combined 14.1% of US production. Over the same period, natural gas rose from 16.2% to 43.1% of power generation.

These efforts to transition from coal to wind and solar have been possible because US demand for electricity was almost flat from 2007 to 2023 at about 4.1 million gigawatt-hours. But grid operators in many states now face an unprecedented ramp in electricity demand.

The forced transition to green energy drives three new sources of power demand. First, 22 states now have zero-emissions vehicle mandates, which intend to ban the sale of cars with internal combustion engines by 2035, or a similar target date. In March, the Environmental Protection Agency finalized regulations that attempt to force about 40% of new light vehicles sold by 2030 to be electric. California and the EPA have also recently enacted regulations to force the heavy trucking industry to transition to electric trucks. To the extent that electric vehicles (EVs) are adopted, this will require the grid to deliver large amounts of additional power.

Second, cities and counties in seven states have banned gas appliances in new housing construction, such as New York City. In a 2022 study, the New England ISO concluded that a shift from gas appliances to electric appliances in New England would require more new electricity than a shift to EVs.

Third, the US federal government proposes to establish a new green hydrogen fuel industry. Seven billion dollars have been earmarked for “regional hydrogen hubs” to try to stimulate hydrogen production. Green hydrogen is produced by electrolysis of water and uses large amounts of electricity. To produce a single kilogram of hydrogen from electrolysis requires 50 to 55 kilowatt-hours of electricity, which is about double the daily electricity used by a typical US home. Plans call for billions of kilograms of green hydrogen to be produced.

But the electricity needed for the new artificial intelligence (AI) revolution will be greater than that needed for EVs, electric appliances, and green hydrogen combined. Amazon, Alphabet, Meta, Microsoft, and dozens of other firms are building massive new multi-acre data centers. In addition to new facilities, servers in the nation’s 2,700 data centers are being upgraded with new high-performance processing cards, boosting data center power consumption by six to ten times. Today, data centers use about 4% of US electricity, but the AI revolution is expected to boost that demand to more than 20% of US electricity consumption within the next ten years. Cryptocurrency generation, such as Bitcoin, also uses large amounts of electricity.