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The bigger risk is underinvestment, claims consulting biz McKinsey
US power companies must decide how much capacity to build for soaring datacenter demand, knowing that some planned facilities may never materialize and the AI bubble could deflate. Consulting firm McKinsey & Company says the greater near-term risk is building too little.Driven by the AI craze, a boom in datacenter building is expected to see the energy consumed by these facilities grow by 26 percent this year, as The Register reported not too long ago.McKinsey's own figures indicate that datacenters will account for about 75 percent of projected US power demand growth over the next decade. The current building rate would require the equivalent of almost 30 GW of additional power each year, including roughly 20 GW for IT equipment and the rest for cooling, distribution and resilience.
Whether that growth materializes depends on demand for AI compute holding up. McKinsey notes that although corporate interest in AI remains high, implementation is uneven: 71 percent of organizations report "negative implementation outcomes," while parts of the ecosystem exhibit bubble-like characteristics.
Even if AI compute growth slows, McKinsey argues, the generation and transmission infrastructure built to support it is unlikely to become stranded. The assets could serve other demand while strengthening grid reliability and resilience.A similar report from Bain & Company almost two years ago warned that the US energy sector needed to ramp up spending on generation and grid infrastructure, or demand could outstrip supply within a few years.Datacenters are not the only source of new demand. Electric vehicles and the electrification of industrial processes will also place pressure on supplies.The report estimates that the US has roughly 40 GW of spare dispatchable capacity to accommodate near-term demand growth, plus about 100 GW of committed new capacity.However, 50 to 75 GW of coal and gas-fired steam capacity is expected to retire, while projected demand growth stands at about 120 GW. That leaves a nationwide capacity gap of approximately 30 to 55 GW by 2030.To help bridge this looming gap and maintain grid reliability, utilities have been bringing retired plants back online and extending the lives of coal and gas facilities. These measures provide important temporary system relief but are likely insufficient, McKinsey says.
