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Dive brief:
- Bank of America analysts forecast the U.S. will need more than 230 GW of new generation capacity over the next five years, but regulated utilities are expected to add only about 93 GW of accredited supply, leaving a gap of more than 100 GW.
- According to the report, data centers alone could add approximately 125 GW of US electricity load during the period, boosting global electricity demand growth at a compound annual growth rate of 4.1% from 2026 to 2030.
- With large gas turbines sold out by 2030, data center developers are increasingly likely to turn to on-site gas engines as companies expand coal plant operations, deploy batteries and make powertrain upgrades, BofA analysts said.
Diving knowledge:
The report’s forecast comes largely from BofA semiconductor analysts, whose projections for the rapid deployment of AI computing infrastructure, including specialized chips and servers, underpin the company’s outlook for a growing U.S. electricity supply gap.
Analysts also note that utilities have revised demand forecasts upward in each of the past three years as AI-related demand for electricity has materialized faster than expected.
As utilities struggle to bring new capacity online quickly enough, BofA expects more data center developers to return to behind-the-meter generation. More than 7.5 GW of data center projects with on-site generation are already under construction, with more than 60 GW more in pre-construction, according to the report. Rather than operating completely off-grid, these facilities are expected to combine self-generation with traditional grid connections to improve reliability and shorten project timelines.
AI infrastructure is reshaping long-term electricity demand after a decade of largely flat consumption growth driven by improvements in efficiency, LED adoption and distributed solar generation. Analysts said planned generation additions may overstate available supply because intermittent resources such as wind and solar contribute less credited capacity during peak demand than the plate ratings suggest. As a result, company resources will remain essential even as renewable generation expands.
Natural gas is expected to play a central role in meeting the new demand, but equipment availability is a constraint. Large gas turbines remain the technology of choice for flexible energy, but manufacturing capacity is largely committed until 2030 and new units may take years to enter service after shipping. This has increased interest in alternative natural gas engines, which can be deployed more quickly and respond quickly to changing loads. Analysts said manufacturers such as Caterpillar, INNIO, Rolls-Royce and Wärtsilä have expanded production to meet growing demand.
Utilities and regulators are also increasingly keeping existing generating assets online longer to preserve reliability, according to the report. Identifies coal plants in Maryland, Wisconsin, Indiana, Utah, Kansas, Nebraska and Mississippi that have delayed or canceled retirement dates to preserve shipping capacity.
Battery storage, transmission expansion and regulatory changes that increase utilization of existing generation assets could also help address reliability challenges, though analysts caution that transmission projects often take years to afford and build. They cite the Champlain Hudson Power Express, which took 16 years from planning to energization, as an example of the development timelines facing new infrastructure.
The concentration of AI-driven data center growth in the US is pushing utilities and regulators to address how to connect large new loads and allocate the cost of new infrastructure. Higher energy prices may cause some demand destruction among energy-intensive customers and industries, but academic research suggests that demand for electricity is relatively inelastic in the short to medium term. A 10% increase in real electricity prices typically results in a 1% to 2% decrease in consumption.
“The market is no longer constrained by demand, but by where energy can actually be delivered,” BofA analysts said in their Global Research Report.
