The rapid rise of artificial intelligence (AI) is transforming data centers into massive energy consumers, outpacing even emerging sectors like electric vehicles and hydrogen in terms of power demand. According to a recent report by Bloomberg New Energy Finance (BNEF), data centers are expected to make up 8.6% of total U.S. electricity demand by 2035, more than double their current 3.5% share.

This surge in demand is driven by AI’s insatiable appetite for computing power. Sophisticated AI models like OpenAI’s GPT-4 require powerful data centers that consume vast amounts of electricity. Training GPT-4 alone consumed around 30 megawatts, and OpenAI’s Stargate initiative anticipates that next-generation data centers may require multi-gigawatt capacities.

A dramatic surge in power demand

BNEF forecasts that U.S. data center power demand will double over the next decade. In 2024, the demand is expected to reach 35 gigawatts, rising to 78 gigawatts by 2035. The increase in actual electricity consumption will be even more dramatic, with hourly power demand projected to nearly triple from 16 gigawatt-hours in 2024 to 49 gigawatt-hours by 2035.

This trend is closely tied to the need to process vast volumes of data, especially in AI applications, where training advanced models requires intensive energy use. However, new innovations—such as DeepseekV3’s “Mixture of Experts” architecture, which utilizes a network of smaller, specialized models—could help mitigate the rise in energy consumption by improving training efficiency.

Despite strong demand projections, BNEF acknowledges the real-world challenges of building these facilities, which cannot be constructed overnight. In the U.S., it typically takes about seven years to bring a data center from initial permitting and land acquisition to full operation. This lengthy development timeline reflects the hurdles tech firms face in rapidly expanding the infrastructure needed to meet growing energy demand.

The data center market is far from fragmented. Just four tech giants—Amazon Web Services (AWS), Google, Meta, and Microsoft—currently control 42% of total U.S. data center capacity. AWS alone plans to quadruple its existing capacity from 3 gigawatts to nearly 12 gigawatts in the coming years. This level of market concentration suggests that a small number of players will have enormous influence over regional energy infrastructure.

A global trend: Rising demand worldwide

While the United States remains the most important market for data center growth, global electricity demand from data centers is rising steadily. BNEF projects global demand will reach 1,200 terawatt-hours by 2035 and 3,700 terawatt-hours by 2050. This growth mirrors the global acceleration of digital adoption, with a dramatic rise in data usage driving increased energy needs for processing, storage, and transfer.

The AI boom is turning data centers into one of the most energy-intensive sectors worldwide. As technologies and data processing needs grow exponentially, a significant challenge looms for power grids, which must adapt to this shifting landscape. The future of energy in the data center era is defined by surging demand, market concentration, and deep implications for global energy infrastructure.