Electricity demand from data centers in the United States has surged unrealistically, raising concerns about grid stability and prompting questions about "phantom demand"—electricity needs that may not actually exist. Texas has become the first major state to temporarily suspend new data center grid connections to verify which projects are genuine, after cumulative electricity requests exceeded 700 gigawatts, more than ten times the current nationwide usage by data centers.
The surge in artificial intelligence (AI) technology has led major tech companies to invest over $700 billion in data centers this year, significantly impacting the U.S. power grid and raising concerns about "phantom demand" or potentially nonexistent electricity needs.
An investigation by Reuters into utility and grid operator data found that electricity requests from major providers—mostly data centers—in the central, eastern, and southern U.S. total more than 700 gigawatts. This amount is equivalent to the electricity used by all U.S. households combined and is over ten times the actual electricity demand of current data centers.
Consequently, Texas has become the first data center hub to decide to "suspend" new grid connections temporarily to verify actual operational plans, as electricity requests in Texas surged dramatically from 48 gigawatts in 2023 to 474 gigawatts currently.
Analysts and consumer protection groups warn that many requests are duplicates or originate from companies lacking the capital and expertise to build real projects. This volatility negatively affects grid planning, and if officials plan infrastructure based on these inflated figures, ordinary citizens might bear the cost through higher electricity bills.
Conversely, as states implement stricter criteria such as advance deposits and connection study fees, the reported electricity demand figures have noticeably decreased.
For example, Chicago-based Exelon reduced its high-probability data center electricity demand estimate by 40%, down to 11 gigawatts, after enforcing stricter collateral requirements. Similarly, AEP Ohio saw data center electricity demand drop by more than half following local legislation imposing connection study fees of up to $100,000.
Texas Governor Greg Abbott issued strict orders requiring data center project proposers to disclose the "true owners," water resource usage details, local energy generation, and tax benefits to prevent distorted grid stability from incomplete data.
Likewise, Pennsylvania Governor Josh Shapiro signed an executive order tightening licensing conditions for projects of 25 megawatts or more, after finding that out of over 100 proposed data center projects, only 20 had properly applied for permits, and most lacked energy sources or customer backing.
Although several states have begun "filtering out" invalid requests, grid operators warn that confirmed electricity demand from genuine data centers remains high enough to pose risks to a power system already facing shortages of new generation capacity—a major challenge the U.S. must urgently address.
/sourceReuters