What are the factors straining the power grid?
We are transitioning from viewing electricity as a convenience to recognizing it as a critical lifeline. If the power goes out, we cannot access the internet, power our car, or turn on the AC if it is hot outside. Power outages can lead to many adverse health outcomes, including death. U.S. electricity demand is projected to grow by 9% by 2028 and 18% by 2033, driven by electrification, data centers, artificial intelligence (AI), the transition to electric vehicles (EVs), increased extreme heat, and manufacturing expansion. The U.S. power grid is under increasing strain from all angles due to rising electricity demand, aging infrastructure, and the challenges of integrating new energy technologies. This will have real impacts on the quality of life for US citizens.
AI data centers alone could account for 44% of U.S. electricity load growth from 2023 to 2028. By 2030, they are expected to account for 11-12% of total U.S. power demand, up from 3-4% today. Residential electricity prices are expected to rise from 15 cents/kWh in 2022 to an average of 16.7 cents/kWh in 2025, reflecting higher demand and infrastructure costs.
The transition to EVs is not currently straining the U.S. power grid significantly because most EV charging occurs at night when overall electricity demand is low, which helps balance the load on the grid. However, by 2035, the uptake of EVs is projected to require 3,360% more electricity, which could strain the grid if not adequately managed.
High temperatures drive up electricity consumption as people rely heavily on air conditioning. This can cause demand to outstrip supply, especially during prolonged heat waves. Furthermore, heat waves often coincide with other extreme weather conditions, creating multiple threats to grid stability. The Climate Central report stated that of all significant U.S. power outages reported from 2000 to 2023, 80% (1,755) were due to weather. Power loss during extreme heat can be life-threatening, especially for vulnerable populations reliant on cooling systems or medical devices. Concurrent heat waves and power outages can more than double heat-related mortality rates. For example, simulations in three U.S. cities (Atlanta, Detroit, and Phoenix) showed that 3% and 50% of the urban population could require medical attention during such events, depending on location and intensity. Vulnerable groups, such as older adults, individuals with preexisting conditions (e.g., cardiovascular or respiratory diseases), and those relying on electricity-dependent medical devices, face heightened risks.
Wildfires can cause extensive damage to the power grid and infrastructure, including burning or destroying wooden utility poles and damaging transmission and distribution lines. They also lead to widespread power outages in affected areas. Faulty grid equipment can spark wildfires, as seen in the 2018 Camp Fire, the costliest wildfire in U.S. history.
Public Safety Entity (PSE) Healthy Energy has mapped Public Safety Power Shutoffs (PSPS) across the country and found that PSPS outages are concentrated in and around high-fire threat districts. These districts are regions where the California Public Utilities Commission, CalFire, and others determined utility infrastructure poses the most significant fire risk. The most significant number of outages took place in Southern California counties.
In this peer review paper, the authors found that of 1,657 counties with reliable outage data, 1,205 (72.7%) experienced an 8+ hour outage co-occurring with an individual severe weather event, and 904 (54.6%) with multiple simultaneous severe weather events. Anomalous precipitation events co-occurring with outages were the most common, affecting 1,170 (70.6%) counties. Recent incidents, like the Los Angeles wildfires in January 2025, were preceded by a surge in power grid faults. The cycle of grid failures triggering wildfires and causing more grid failures creates a vicious cycle threatening grid resilience. Considering these factors, planning for a resilient grid—one that balances load growth, population health, cost, and risk—will continue to incorporate a growing share of renewable energy sources.
How much does the current power grid rely on fossil fuel combustion?
According to the U.S. Energy Information Administration (EIA), the U.S. power grid still heavily relies on fossil fuel combustion. In 2023, about 60% of U.S. electricity was generated from fossil fuels, including coal, natural gas, petroleum, and other gases, such as blast furnace gas, propane gas, and other manufactured and waste gases derived from fossil fuels. Natural gas also consists of methane, butane, and propane. Additionally, other gases like nitrogen and hydrogen sulfide can be included.
Natural gas was the most significant contributor within this category; renewable energy sources, including hydro, accounted for 21% of electricity generation in 2023, while nuclear power contributed 19%. It is worth noting that the latest Short-Term Energy Outlook from the US EIA forecasts that solar will grow 75% from 2023 – 2025. Wind & solar are forecast to lead power generation in the US for the next two years. This makes sense: many renewable energy sources can be faster to deploy than commissioning and building a new power plant run on fossil fuels, proof that renewables will play a critical role in adapting to rising energy demand. This is also extremely true in the context of nuclear.
AI poses several challenges to the decarbonization of the power grid.
AI and data centers have a substantial carbon footprint. In our recent study, we found that data centers accounted for more than 4% of total US electricity consumption—with 56% derived from fossil fuels—generating more than 105 million tons of carbon emissions. Geothermal power is viewed as an excellent alternative to provide renewal energy.
In the context of data centers, “the Cloud” refers to a vast network of remote servers hosted on the Internet to store, manage, and process data rather than on local servers or personal computers. The Cloud now has a more significant carbon footprint than the airline industry. A single data center can consume electricity equivalent to 50,000 homes. Morgan Stanley predicts data center carbon emissions will triple by 2030 due to AI, emitting 2.5 billion tonnes of CO2.
The long-term benefits of decarbonizing the power grid are projected to outweigh the costs.
According to recent studies and analyses, decarbonizing the U.S. power grid by 2035 presents significant costs and substantial benefits. Total additional power system costs between 2023 and 2035 range from $330 billion to $740 billion across various scenarios that incorporate the building of new power generation, transmission infrastructure, and grid-sited flexibility. However, the health benefits from improved air quality alone could save $390 billion to $400 billion by avoiding premature deaths. Factoring in avoided risk from climate events, the overall net benefit to society ranges from $920 billion to $1.2 trillion.
In summary, while the upfront costs are substantial, the long-term benefits of decarbonizing the power grid are projected to outweigh the costs significantly. Innovative solutions that integrate data centers with renewable energy sources and benefit local communities are emerging as a win-win approach to address climate challenges while meeting growing computational demands. For instance, geothermal cooling systems can significantly reduce data center energy consumption while providing year-round efficiency. Similarly, companies like WindCORES are pioneering the concept of housing data centers inside wind turbines, achieving near carbon neutrality and utilizing previously wasted energy. Solar power integration offers data centers energy independence and cost predictability, with tech giants like Google and Apple leading the way in solar-powered facilities. These approaches not only solve the energy needs of data centers but can also benefit surrounding communities.
