The Long-Term U.S. Electricity Picture: Exponential Growth Seems Unavoidable

by | Mar 27, 2025

Last week we reported on the 2025 ARPA-E Conference in Washington, D.C., and the Trump Administration’s goal to provide the energy to meet U.S. demands. Of particular interest is where U.S. electricity consumption is headed. In 2023, the U.S. had the second-highest electricity consumption of all countries at 4,273 tera-watt hours (TWh). This represented 14.4% of the global electricity consumption of 29,665 TWh, and was second only to China’s consumption of 9,443 TWh (31.8% of the world’s electricity consumption). From a per-capita perspective, the U.S. was the twelfth-largest consumer of electricity at 12.44 megawatt hours (MWh) per capita; this compares to Iceland’s consumption of 51.92 MWh per capita (the world’s highest) and 6.64 MWh per person in China (the 39th highest in the world). The real question is where is this electricity consumption going in the next 25 years?

Where Does Most U.S. Electricity Consumption Occur?

As an advanced country, there are a number of factors driving U.S. electricity consumption:

  • Residential: The biggest sector driving U.S. electricity consumption is the residential sector. In 2022, the residential electricity sector consumed 1,510 TWh of electricity (38.4% of U.S. total demand). Residential uses are primarily driven by space cooling (16.2%), space heating (15.9%) and water heating (11.4%). This is especially true as the U.S. transitions away from the fossil fuel heating of both water and space, and moves toward electricity-based space and water heating (nearly all cooling has been electricity-based for some time).
  • Commercial: Commercial electricity consumption in 2022 was 1,390 TWh (35.4% of electricity usage). The largest use within the commercial sector are computers and office equipment (11.4%), followed by refrigeration (11.3%), space cooling (10.2%), lighting (9.3%), and ventilation (7.9%).
  • Industrial: 26.0% of U.S. electrical consumption (1,020 TWh) is in the industrial sector, of which more than half (51.6%) is used by machine drives (motors, etc.). Process heating and boiler heating is the second largest industrial usage at 11.1%, followed by facility heating, ventilation, air conditioning, and cooling (8.4%). Most of industrial electricity consumption is by manufacturers (78%).

Growth Drivers for U.S. Electricity Consumption

U.S. electricity consumption is on a rapid rise, with the Federal Energy Regulatory Committee (FERC) 2024 5-year peak demand growth forecast being 947GW, up from the 2022 peak demand growth forecast of 840GW. Moreover, most industry experts believe that FERC and the U.S. Energy Information Agency (US-EIA) are actually vastly underestimating the actual electricity consumption growth that is likely to occur in the next 5 years.

While residential electricity growth is the biggest sector consuming electricity, it is not the fastest growing sector consuming electricity in the U.S.. The biggest growth areas for U.S. electricity consumption are:

  • Data Centers and Artificial Intelligence: We have spoken several times about how the growth in data centers, specifically those that provide compute and storage for artificial intelligence, have been growing drastically over the last 5-10 years. Most indU.S.try forecasts expect data center electricity consumption to grow from 176 TWh in 2023 (4.4% of total U.S. electricity consumption) to between 6.7% and 12.0% of total U.S. electricity consumption by 2028 (between roughly 320 TWH and 580 TWH); where this goes from 2030 on is anyone’s guess, but it likely won’t go down.
  • Electricity Consumption by Electric Vehicle Charging: This year, over half of the vehicles shown in China are expected to be electric vehicles (EVs). In spite of the Trump 2.0 Administration’s recent moves, vehicle electrification (and more generally, transportation electrification) will not likely drop off – it is more likely to be “paused” for a few years. This also goes for the electricity consumed by EVs.
  • Heating and Cooling of Buildings: Like residential spaces, commercial buildings are also switching to electric heating and cooling. While economics is one driver for the switch to electric heating and cooling (and the increased efficiency of these systems versus fossil fuel-based heating and cooling), the “on-shoring” of manufacturing being driven by Trump 2.0 tariffs is also a strong factor driving this demand.

As electricity demand increases because of these factors, new electricity production and distribution facilities (and investments) will be required to get this electricity to the places where it is being consumed. On the production side, it is unlikely that renewables (particularly solar energy) will be able to meet this demand by itself. The impact of solar power production on net load has shifted the “duck curve” (shown below) significantly over the past fifteen years (this is from the California Independent System Operator). The only solution to this is battery storage, which started “taking off” in 2020, and grew 66% in 2024 alone. Even with this growth, battery storage only accounts for about 26 GW of total energy capacity, roughly 2% of utility-scale generating capacity in the U.S.

Where Do We Go Next to Meet U.S. Electricity Demand?

Over the long-term, time will work in our favor to provide the electricity the U.S. needs. Whether that electricity comes from fusion (which we forecast to start contributing to the grid in the mid-2030s), additional nuclear power plants (which currently take about a decade to be constructed and come online), or increased efficiencies in the use of electricity due to technology advancements, eventually we will reach a “happy medium” where demand and production are more balanced. Until this point (which is probably 10-15 years away), the only solution is natural gas power plants. While these are quick to build (2-3 years) and the U.S. has a lot of natural gas, the environmental impact is obviously something that is best avoided if possible. One easy way to lessen the growth in demand is to incentivize more efficient heating and cooling for residential customers, and more efficient computers and office equipment in the commercial sector (especially in data centers). Not a complete solution to the “electricity gap”, but every watt counts.