The Forces Behind Rising Energy Demand
NORTHAMPTON, MA / ACCESS Newswire / July 8, 2025 / Welcome to the first edition of our Load Growth series where Robert Ott, Vice President of Origination for NRG Business, will break down the recent trends in load growth, explaining what they really mean and how they are influencing both the market and customers. Join us as we explore the key insights and implications behind these changes.
As populations grow and technology advances, the demand for energy is skyrocketing. Understanding energy load growth, or the rising need for electricity, gas, or other forms of energy, is crucial to ensuring a reliable supply. This growth comes with both challenges and opportunities, as we balance the need for more power with managing energy costs, ensuring they remain stable for consumers.
Overview of unprecedented growth
Energy load growth has remained relatively consistent year over year across most Independent System Operators (ISOs). However, ERCOT stands out, experiencing a 14% rise in demand from 2021 to 2023. This growth is largely fueled by Texas' rapid population increase and its prominence in the expansion of data centers.1 To address this surge, ERCOT is highlighting the need for new thermal generation, as seen with the Texas Energy Fund (TEF) awards in 2024. In response to these large load forecasts, we are adding an additional 1.5 GW of generation through the TEF, as well as collaborating with industry leaders to drive speed to market.
Additionally, PJM, home to many top tier data center markets, is also projecting large load growth throughout the end of the decade. To adequately prepare for this demand, PJM is prioritizing shovel ready generation projects to ensure its load forecast, seen below, is met with new generation.2 These initiatives reflect the changing dynamics of energy demand in these regions and highlight the challenges and opportunities of meeting future energy needs.
Drivers of demand growth
One of the primary drivers of demand growth is artificial intelligence (AI). AI models consume a significant amount of energy because of the high-performance processors and vast amount of data used to train the model. Data centers and AI companies have already invested $400 billion in high-performance chips, showcasing the significance of AI-driven growth. 3 This is accelerating with $302 Bn in projected spend in 2025 on AI data centers by hyperscalers. 4
Additionally, data centers are increasing rack and chip density, further accelerating load growth and the build-out process. As AI chips grow more compact and workloads intensify, power demands will surge, fitting greater computational capacity into ever-smaller spaces. This combination of technological advancement and infrastructure density is playing a key role in driving energy demand projections upward.
In addition to AI-driven growth, another factor forecasted to drive energy demand higher is the onshoring of large industrial loads. With the return of manufacturing and industrial facilities to the U.S., reversing decades of offshoring, energy demand is expected to rise further.
Other factors contributing to load growth include the rise of cryptocurrency mining and increased electrification efforts. These sectors, along with AI, are all playing a pivotal role in driving substantial increases in energy load.
In our next edition
Understanding the impact of these factors is critical as they will place significant strain on the energy grid, requiring substantial upgrades and innovations in infrastructure to meet rising demand. With such rapid growth, the energy landscape is evolving quickly, and we must anticipate these challenges to ensure a resilient, cost-effective, and sustainable energy system for the future.
In our next blog, I'll dive into the impacts of this load growth on customers and energy markets - exploring how these changes are shaping pricing, reliability, and the overall energy experience.
1US Census Bureau and 451 Research
2Utility Dive
3Goldman Sachs
4Morgan Stanley
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SOURCE: NRG Energy
View the original press release on ACCESS Newswire:
https://www.accessnewswire.com/newsroom/en/utilities/nrg-energy-exploring-load-growth-1046765
