US power demand surge from data centers could lift fossil fuel generation, EIA says
March 12 (Reuters) – U.S. fossil fuel generation could rise over the next two years as surging electricity consumption from data centers tightens power supplies, the U.S. Energy Information Administration said in an analysis on Thursday.
The EIA noted that U.S. electricity demand has been growing at an annual rate of 1.7% since 2020, following more than a decade of flat growth, driven primarily by the expansion of large-scale computing facilities.
In its February Short-Term Energy Outlook, or STEO, the agency forecasts that nationwide electricity load will increase by 1.9% in 2026 and 2.5% in 2027, with the fastest growth projected in the Texas ERCOT system and PJM, a grid operator covering parts of the mid-Atlantic and Midwest.
The EIA’s high-demand scenario, which assumes a more rapid expansion of data centers, keeps generating capacity unchanged from February’s baseline STEO.
It anticipates greater reliance on natural gas to cover additional load, projecting a 7.3% increase in natural gas-fired output between 2025 and 2027, compared with a 1.7% rise under the baseline forecast. Coal generation, while still declining, would fall at a slower rate under the high-demand case.
Wholesale power prices are also expected to climb, with the EIA forecasting that ERCOT’s 2027 prices could average $37/MWh higher than its February projections, a 79% rise, due to the Texas grid’s limited ability to draw power from neighboring regions during peak demand. Other regions could face more modest increases of around $1–$3/MWh, the report said.
Reporting by Anmol Choubey in Bengaluru; Editing by Will Dunham
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US power demand surge from data centers could lift fossil fuel generation, EIA says, source
