New Report: U.S. Data Center Projected Power Demand Exceeds Capacity of Global Chip Suppliers

WASHINGTON, D.C. – A new report released today by London Economics International (LEI) commissioned by the Southern Environmental Law Center (SELC), finds that electricity demand forecasts tied to U.S. data center growth are plagued by uncertainty and systemic overstatement. The report, “Uncertainty and upward bias are inherent in data center electricity demand projections”, identifies compounding industry challenges and incentives that reflect a bias to overestimate growth in data center electricity demand. SELC finds this has serious implications for the Southeast.

Critically, LEI’s assessment reveals a stark mismatch between projected U.S. data center electricity demands and realistic global semiconductor chip production capacities. Even under optimistic scenarios for global chip manufacturing growth, LEI finds that projected data center demand from just 77% of the U.S. power market would require 90% of global chip supply through 2030. These findings indicate that the current headline demand projections are implausible given global demand for chips.

The uncertainty and upward bias in data center electricity demand projections create the risk that new energy infrastructure (including electricity generation and transmission, and gas pipeline capacity) proposed to meet the needs of these data centers could become underutilized and lead to higher costs that will fall on other ratepayers.

“This report underscores a critical and ongoing concern: inflated and speculative data center electricity demand forecasts in the Southeast are driving a dramatic and unnecessary overbuild of infrastructure that threatens to lock in fossil fuels, hike energy bills, and crowd out more reliable, cost-effective clean energy,” said Megan Gibson, Senior Attorney at the Southern Environmental Law Center. “Such speculative infrastructure investment creates significant economic risks for ratepayers, who ultimately bear the financial burdens. Regulators must urgently prioritize transparent, realistic, and evidence-based analyses to ensure infrastructure developments are truly necessary and beneficial, safeguarding communities and promoting sustainable growth in the Southeast and throughout the country.” 

Other key findings include:

• Redundant requests: Evidence indicates that data center developers frequently submit redundant requests for electrical service across multiple jurisdictions simultaneously, and therefore their requests may be incorporated into multiple demand forecasts before they have any “skin in the game.”
• Lack of incentives toward scrutiny: Cost-of-service regulatory models reward vertically integrated utilities for investments in capital expansion, which can discourage skepticism from power providers even when data center demand remains speculative.
• Economic risks to ratepayers: Due to data centers’ shorter operational lifespans and inherent flexibility in locating or relocating, there is a risk of underutilization of energy infrastructure assets.
• Other factors slow the growth of energy demand from data centers: Bottlenecks and long lead times for energy generation equipment such as natural gas turbines, and limitations on semiconductor chip supply and availability, are currently slowing the pace of actual demand growth.

“Data center growth has become a suspiciously convenient justification for pipeline and gas plant projects in the Southeast. Pipeline and utility companies make most of their money by building big things and then charging ratepayers for them,” said Shelley Robbins, Senior Decarbonization Manager at the Southern Alliance for Clean Energy. “The result will be an expensive overbuild if we do not carefully scrutinize the genuine likelihood that data center loads will actually materialize. The incentive to game the process is immense for all parties – data center developers, pipeline companies, and utilities alike. Research such as this report by LEI is crucial as we work to daylight these processes and hold parties and decision-makers accountable.” 

The Southern Environmental Law Center engaged London Economics International to develop this report.