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    Fertile Ground for Microgrids: EIA Report Shows Commercial Sector Electricity Demand Surging in States Attracting Data Centers

    July 18, 2024
    The growth rate is fastest in states leading in data center infrastructure, such as Virginia. That state's commercial sector electricity demand rose nearly 15,000 kWh in 2023 compared to 2019.
    Rendering of future Microsoft data center facility. Image credit Enchanted Rock
    Rendering of future Microsoft data center facility. Image credit Enchanted Rock

    U.S. commercial sector energy consumption is finally and fully recovered from the COVID pandemic, and the ascension of data center electricity demand is proving to be the key antidote in that healing, according to new statistics from the federal Energy Information Administration (EIA).

    Of course, this hyperscale activity also could create a crisis as electric utilities, which predicted flat load growth only five or so years ago, are scrambling to meet the coming expansion of artificial intelligence (AI) and cloud-based computing and server facilities. Microgrids are considered a current and future solution to those demand challenges. 

    Electricity consumption by the nation’s commercial customers totaled close to 14 billion kilowatthours (kWh) in 2023, according to the EIA. This is 1% higher than in 2019, and the first overall signs of notable commercial demand expansion since the COVID-19 virus and resulting shutdown devastated supply chains and office activity.

    Virginia is for data center lovers

    Graphic courtesy of the EIA
    eia_commercial_sector_demand

    Most of that growth was concentrated in 10 states—Virginia, Texas, South Carolina, Arizona, North Dakota, Oklahoma, Florida, Utah, Nevada and Oregon. Electricity demand by commercial sector customers in these states grew 10% or a combined 42 billion kWh in the four years since 2019, the EIA report shows.

    Leading the way was Virginia, which is the top U.S. state for data center location in recent years. Virginia increased commercial sector electricity consumption by nearly 15,000 GWh (or 15 million MWh), since 2019, according to the EIA. During that time, some 94 new data centers have been built and connected there.

    Much of the reason for data centers choosing Virginia has been the state’s densely packed fiber optic networks, the federal report noted. However, rising worries about the utility’s grid ability to keep up with new hyperscale data center construction in the era of artificial intelligence technology is pushing facility planners to consider locations where they can ensure access to ample power, whether it be grid-connected or microgrids.

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    Texas was second on the EIA commercial-sector growth list with an increase of close to 14,000 GWh from 2019-2023. The Lone Star state, which has a competitive electricity market which is focused on lowering prices and has attracted a higher influx of both data center and cryptocurrency mining operations, also is contending as a national leader in all forms of renewable and distributed energy resources, including wind, solar, battery storage and gas-fired gen-sets.

    Texas will be host to the next Microgrid Knowledge Conference happening April 15-17, 2025, at the Sheraton Dallas.

    South Carolina, Arizona, North Dakota, Oklahoma and Florida all showed substantial commercial-sector electricity growth but were distant followers to the paces set in Virginia and Texas. North Dakota, however, showed the highest level of relative growth at 37% over 2019 levels, or up by 2.6 billion kWh in commercial electricity demand, according to the EIA.

    Overall, U.S. commercial sector electricity consumption could rise to more than 1.4 trillion kWh by 2025, an EIA forecast graphic shows. If so, that would be some 130 billion kWh higher than during the pandemic’s economic nadir in 2020.

    “Nationally, we expect U.S. sales of electricity to the commercial sector will grow by 3% in 2024 and by 1% in 2025,” the EIA report reads. “Data center developments are evolving rapidly, and we plan to re-evaluate our upcoming forecasts as we receive more information.”

    A June forecast on data center growth nationally by investment firm Jefferies Group predicts the industry’s capacity will increase more than 50% and market value more than double to $280 billion 2030.

    A report earlier this year by Goldman Sachs also anticipates a doubling of capacity and load growth requiring close to $50 in new power generation investment by utilities. Many companies in the hyperscale sector, such as CoreWeave and Amazon Web Services, are signing deals for dedicated power and microgrids, in some cases.

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    About the Author

    Rod Walton, Managing Editor | Managing Editor

    For Microgrid Knowledge editorial inquiries, please contact Managing Editor Rod Walton at [email protected].

    I’ve spent the last 15 years covering the energy industry as a newspaper and trade journalist. I was an energy writer and business editor at the Tulsa World before moving to business-to-business media at PennWell Publishing, which later became Clarion Events, where I covered the electric power industry. I joined Endeavor Business Media in November 2021 to help launch EnergyTech, one of the company’s newest media brands. I joined Microgrid Knowledge in July 2023. 

    I earned my Bachelors degree in journalism from the University of Oklahoma. My career stops include the Moore American, Bartlesville Examiner-Enterprise, Wagoner Tribune and Tulsa World, all in Oklahoma . I have been married to Laura for the past 33-plus years and we have four children and one adorable granddaughter. We want the energy transition to make their lives better in the future. 

    Microgrid Knowledge and EnergyTech are focused on the mission critical and large-scale energy users and their sustainability and resiliency goals. These include the commercial and industrial sectors, as well as the military, universities, data centers and microgrids. The C&I sectors together account for close to 30 percent of greenhouse gas emissions in the U.S.

    Many large-scale energy users such as Fortune 500 companies, and mission-critical users such as military bases, universities, healthcare facilities, public safety and data centers, shifting their energy priorities to reach net-zero carbon goals within the coming decades. These include plans for renewable energy power purchase agreements, but also on-site resiliency projects such as microgrids, combined heat and power, rooftop solar, energy storage, digitalization and building efficiency upgrades.

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    Google data center in Oregon. Image credit By Lambtron-own work, courtesy Wikimedia Commons
    Image credit Noah Berger for AWS/Courtesy Data Center Frontier
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