Data Center Energy Needs Are Upending Power Grids and Threatening the Climate | Article

Key Takeaways:

There were 5,426 data centers nationally as of March 2025, and the number is skyrocketing. Collectively, these centers consumed about 17 gigawatts (GW) of power in 2022 (for context, a large nuclear power plant generates about 1 GW).
About 56% of the electricity used to power data centers nationwide comes from fossil fuels. Data centers’ projected electricity demand in 2030 is set to increase to up to 130 GW (or 1,050 TWh), which would represent close to 12% of total U.S. annual demand. Building new fossil-fuel plants to fulfill this demand will increase carbon emissions and further contribute to climate change.
To increase sustainability, data center developers have three options when it comes to siting data centers: they can build them in places with an abundance of renewable energy, they can generate renewable power on-site, or they can make their facilities more energy efficient, thereby reducing their need for power from the grid.

Data centers have become a significant part of our daily lives, from cloud computing to video streaming to artificial intelligence (AI) and crypto mining. Data centers are essentially large warehouses filled with internet-connected devices, and each center is connected to others through mostly buried wires. In room after room of rows and stacks of servers, routers, and switches, data is flowing and humming almost 24/7. Internet traffic data flows through the fiber-optic underground cables between data centers at enormous speeds, enabling our modern lives.

Data centers also create jobs. About 500,000 people were working in data centers in 2023. While there are no national estimates for the economic benefits created by data centers, in Virginia, the 300 data centers across the state contribute about $9.1 billion to Virginia’s economy annually.

But data centers are very energy-hungry and are spreading fast, which is straining the grid and will likely slow our transition to carbon-free energy.

There were 5,426 data centers nationally as of March 2025, and the number is skyrocketing. Collectively, these centers consumed about 17 gigawatts (GW) of power in 2022 (for context, a large nuclear power plant generates about 1 GW). Going back to 2018, the country was home to only 1,000 data centers consuming about 11 GW total, which represented 1.9% of annual U.S. electricity consumption and 31.5 million metric tons of greenhouse gas emissions. In the three years from 2018 to 2021, the number of data centers more than doubled, to 2,600, and then more than doubled again in the next four years. The 176 terawatt-hours (TWh) consumed by data centers in 2023 represented 4.4% of total U.S. electricity consumption and emitted about 105 million metric tons of carbon emissions, negatively impacting the environment and local communities with harmful pollutants.

About 56% of the electricity used to power data centers nationwide comes from fossil fuels. Data centers’ projected electricity demand in 2030 is set to increase to up to 130 GW (or 1,050 TWh), which would represent close to 12% of total U.S. annual demand. It is safe to assume that the new centers built to meet the additional demand will primarily source their energy from fossil fuels (especially natural gas). Building new fossil-fuel plants will increase carbon emissions and further contribute to climate change.

Data Centers Are Energy-Intensive Enterprises

Maintaining a data center’s IT equipment requires energy and generates heat, and the higher the networking capacity of a data center, the larger its power draw. IT equipment (processors, chips, storage, etc.) typically consumes about 45% of a data center's energy. Additionally, cooling systems must be installed in each server room to cool the processors and servers and keep them at optimal temperatures, lest they overheat and suffer damage. This cooling equipment constitutes about 38% of an average data center’s energy consumption. Finally, security systems to protect these devices, backup uninterruptible power supplies, power conditioning, and lighting make up the remaining portion of a center’s energy use.

Billions of data bytes flow every hour into the servers of data centers. Most of that data is stored for later use and accessibility. Globally, in 2024, about 149 zettabytes of information were created, captured, and copied. Given that the United States holds one-third of all data centers, roughly 50 zettabytes moved through U.S. data centers in 2024 (one zettabyte is roughly equivalent to one billion terabytes or a trillion gigabytes).

Data centers running complex operations and code require greater use of graphic processor units (GPUs) and computing processor units (CPUs). As these units increase in complexity to handle AI calculations, their energy and water consumption increase in parallel.

Of course, the power drawn by data centers varies by utilization rate and size. Small data centers owned or co-located next to company, government, or university buildings have low utilization rates. These internal facilities are mainly used for research computing and networking purposes. About 10% of all data center load is attributable to small-scale data centers.

Bigger enterprise data centers, owned by single, large companies for their exclusive use, account for another 20-30% of the total data center load.

Colocation data centers are external, standalone structures rented by third parties. Specialized developers build them and then rent them out to businesses looking for a space to store their IT servers, hardware, and data storage equipment without the inconvenience of building their own data centers. Cloud computing data centers are similar, but the IT equipment belongs to the developer and is rented out. Because colocation and cloud computing data centers are larger, they consume more energy than small data centers.

Hyperscale data centers are massive IT and CPU warehouses that facilitate large-scale cloud computing. They have grown exponentially in the past few years and will continue to expand, contributing to increased energy consumption and carbon emissions. Together with colocation data centers, they are responsible for 60-70% of all U.S. data center load. Google, Meta, Microsoft, and Amazon Web Services are the main drivers of cloud computing and hyperscale data centers.

In addition to the carbon emissions they generate, data centers consume large quantities of water directly and indirectly. Water is needed to help cool the processors and IT servers. A single data center uses millions of gallons of water a day, which can lead to increased water scarcity in local communities. Furthermore, obtaining and later discharging that water requires additional electricity, which generates additional emissions.

Server racks inside of a data center. Courtesy: Brett Sayles/Canva.

Data Centers as a Paradigm Shift in the Electricity Sector

Since 2009, overall U.S. electricity demand has been essentially flat. Years of energy efficiency policies have resulted in lower energy consumption while the overall domestic economy has grown. This was a reversal from the 1950s, 60s, and 70s, when energy consumption was increasing in parallel with economic growth. Flat electricity consumption while GDP increased year over year means the United States has become more energy efficient since 2009, better using its energy resources and containing its carbon emissions.

However, an uptick in new data center development is upending this energy efficiency trend. Demand for electricity climbed 1.8% from 2023 to 2024. According to the National Electrical Manufacturers Association, electricity demand will increase by 2% annually for the next decade, and by a total of 300% for data centers alone. While the overall increase in energy demand is not solely attributable to data centers (the spread of electric vehicles will also be a big contributor), they will play an increasingly significant role in our national energy use.

Indeed, the Electric Power Research Institute (EPRI) estimates that data centers could consume up to 9% of U.S. electricity generation annually by 2030, up from 4.4% of total electricity demand in 2023. More forceful forecasts from the U.S. Department of Energy indicate that data centers will consume as much as 580 TWh annually in 2028, translating to about 123 GW and representing up to 12% of total U.S. electricity consumption.

Grid Strategies, a consulting firm, names data centers as the principal culprits for projected skyrocketing load growth in the next five years. The centers may be responsible for up to 90 GW in additional annual electricity demand, ending an era of flat demand.

Data Centers and Carbon Emissions

As data centers proliferate, they are increasingly responsible for higher carbon emissions. A 2024 study looking at the environmental impacts of data centers found they emitted 105 million metric tons of carbon emissions, equivalent to about 2% of all U.S. emissions and up from 31.5 million tons in 2018. This represents a 300% increase in emissions, unsurprising as the number of data centers grew from 418 to 5,381 facilities between 2018 and 2024.

Northern Virginia: Data Center Capital of the United States

Northern Virginia is considered the data center capital of the United States because of the large concentration of data centers in just two counties: Fairfax and Loudoun. In fact, Virginia is home to the largest concentration of data centers in the world by far. There are 241 operational data centers in its “data center alley,” with more than 120 more in development. Loudon County alone boasts 199 operational data centers, with 117 in the pipeline. According to some estimates, the future load demand of the county’s new data centers would be about 8,190 MW, assuming that each data center requires 70 MW of power annually. In 2024, Virginia data centers were collectively drawing more than 3 GW of power from the grid.

According to the 2024 study, the average carbon intensity of the 1,795 analyzed data centers was 548 grams of carbon emissions equivalent (gCO2e) per kilowatt hour (kWh), which is about 50% higher than the national average carbon intensity of all economic activities (369 gCO2e/kWh). This means that many data centers are located in carbon-intensive areas and use power generated from fossil fuel power plants to meet their energy needs. Virginia data centers are partly responsible for this high carbon intensity. With 300 data centers statewide, Virginia is heavily represented in the data set, and where it gets its energy from matters a lot. Because the state is part of the PJM power grid, 61% of the electricity consumed by the data center is from fossil fuel power plants (e.g., natural gas, coal, and oil), while only 7.7% comes from renewable sources (geothermal, hydropower, solar, wind, and biomass) and the rest from nuclear plants.

As previously mentioned, 56% of all electricity consumed by data centers came from fossil-fuel power plants from September 2023 to August 2024. In this same period, renewable energy provided 22% of all data center energy needs, while nuclear energy provided 21%. As data center construction surged in the last three years, power coming from fossil fuel plants continued to make up a large slice of a growing pie. As more data centers are built, they will continue to require power from fossil fuel plants emitting harmful pollutants.

Making Data Centers More Sustainable

Data center developers' easiest choice is to plug into a mostly fossil fuel-based power grid. To reverse this dynamic, data center developers have three options when it comes to siting data centers: they can build them in places with an abundance of renewable energy, they can generate renewable power on-site, or they can make their facilities more energy efficient, thereby reducing their need for power from the grid. These solutions and more will be discussed at length in a future article.

Washington State, Oregon, and Vermont enjoy abundant and reliable hydroelectric power that can power new data centers. States like Virginia, which already have hundreds of data centers and more in the pipeline, can invest in renewable energy generation to make their energy mix less carbon intensive. Otherwise, with all the new energy demand from data centers, Virginia risks missing the mark on its state renewable energy goals.

Co-locating renewable energy generation with data centers is an alternative to just plugging into the grid. Installing solar panel arrays and battery storage devices to power these facilities is a viable option that reduces carbon emissions overall and decreases the need for data centers to use carbon-intensive diesel generators as a backup. Instead, the battery storage devices can provide backup power to data centers when the grid goes down.

Last but not least, data centers can be built with energy efficiency in mind, reducing energy consumption. For instance, heat from the IT servers can be captured and used to generate electricity by turning small turbines on-site.

Author: Miguel Yañez-Barnuevo

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