US utilities plan $1.4 trillion infrastructure surge to power the AI boom through 2030

US utilities plan to spend $1.4 trillion by 2030 to power the AI boom

A report analysing capital spending plans from 51 investor-owned utilities finds the $1.4 trillion figure is double what was invested in the prior decade. More than 30 utilities cited data centres as a top growth driver. Average residential electricity prices are already projected to rise 5.1% this year. US investor-owned utility companies are planning to spend $1.4 trillion on electricity infrastructure between now and 2030, more than double what was invested in the prior decade, as the data centre boom driven by artificial intelligence creates an unprecedented surge in electricity demand. That is the central finding of a new report from PowerLines. This nonpartisan nonprofit consumer education organisation analysed capital expenditure plans from 51 investor-owned utilities collectively serving 250 million US customers. The $1.4 trillion figure represents an increase of more than 20% from the same utilities' 2025 projections, and Fortune reported it is up 27% from the $1.1 trillion projected a year ago. A majority of the 51 utilities cited data centres as a top driver of their capital expenditure plans, and more than 30 named data centres as a specific growth and spending driver through 2030. US data centres consumed more than 4% of the country's total electricity in 2023, according to the MIT Energy Initiative; that figure could rise to 9% by 2030, the same research group projects. Deloitte's 2026 Power and Utilities outlook estimates data centre demand alone could reach 176 gigawatts by 2035, a fivefold increase from 2024. Additional drivers of the capex surge include decaying infrastructure requiring replacement, grid hardening against increasingly severe weather events, growing electrification of transport and heating, and population growth, most of the growth in recent years is unrelated to AI, but the data centre boom is widely expected to become the leading driver going forward. The consumer implications are the most contested part of this story. Utilities typically recover capital expenditure through rate increases approved by state regulators, and electricity bills have already risen approximately 40% since 2021, according to Fortune. A separate PowerLines report earlier this year found 56 million Americans will face higher utility bills due to rate hikes regulators approved in 2025. The US Energy Information Administration projects average residential electricity prices will rise a further 5.1% in 2026. If current trends continue, PowerLines estimates that residential customers could end up bearing the cost of nearly half of the $1.4 trillion in planned utility capital spending, around $700 billion. However, the outcome is not fixed. PowerLines notes that large new electricity consumers such as data centres can, if structured correctly, apply downward pressure on rates by providing utilities with more revenue to spread fixed costs across a broader customer base. Edison Electric Institute president and CEO Drew Maloney made this case directly: "When more customers come onto the system,including large new users, we can share the fixed costs more broadly, putting downward pressure on rates for all customers." The degree to which that materialises will depend on how state regulators structure cost allocation between residential and industrial customers as utilities process an investment cycle without modern precedent. The grid is also struggling with capacity constraints that compound the investment challenge. North American Electric Reliability Corporation data cited by Morningstar shows load growth increasing from a previously estimated 6.1% to approximately 11.6% over the next decade. Capacity auction prices in the PJM Interconnection, which oversees the largest competitive wholesale electricity market in the US, have surged from historical norms below $100 per megawatt-day to capped levels above $329 per megawatt-day for the 2026/27 and 2027/28 delivery years.

U.S. utilities plan $1.4 trillion spending spree, up 30%, for next 5 years amid AI construction boom | Fortune

U.S. utilities and power generators are hiking their spending plans to record levels at the same time as consumer utility bills have surged to new highs -- and it's no coincidence. Investor-owned utility companies increased their capital spending plans by more than 27% to at least $1.4 trillion through 2030 -- up from $1.1 trillion a year ago -- and that's not even counting privately held companies, according to a new report released Tuesday from the nonprofit PowerLines. The AI power boom and the wave of construction for data centers is the leading cause of new spending growth nationwide, but it's a convergence of spending causes that have triggered utility bills to spike about 40 percent since 2021 -- "with no signs of slowing down" -- PowerLines said. In addition to the AI era, spending also is growing rapidly because of aging infrastructure, grid hardening from rising extreme weather events and climate change, growing electrification, and population growth. In fact, most of the growth in recent years is unrelated to AI, but the AI data center boom is widely expected to become the leading driver in utilities spending -- and consumer prices -- going forward. "Investor-owned utilities are signaling a record-breaking wave of capital spending, and history shows that those plans are often a leading indicator of future utility rate increase requests," said PowerLines executive director Charles Hua in a statement. Utilities requested a record-high $31 billion in rate hikes in 2025 across the nation -- more than twice the near record from 2024 -- as consumer and political backlash grows over rapid data center and power plant construction nationwide. The biggest bulk of spending is in the South -- from Texas to Maryland -- where $572 billion in spending is planned. Next up is the Midwest with $272 billion in spending on the books. The South is home to both the nation's biggest population and manufacturing surge, as well as much of the data center growth from, again, Texas to Virginia's Data Center Alley. So it's no coincidence that the top three spenders are all southern. Charlotte-based Duke Energy leads the way with an industrywide, record-high spending plan of $103 billion over the next five years, while Florida-based NextEra Energy ranks second at $94 billion. And the aptly named, Atlanta-based Southern Company is next at $81 billion. The top non-southern utility is California's PG&E at almost $74 billion. Utilities spent much of their most recent quarterly earnings calls touting their efforts to prioritize consumer affordability and pointing out that hyperscalers and data center developers are increasingly adopting "pay for your own power" models. But not all developers are paying their own generation, and those that are paying for new power plants aren't necessarily covering the bills for the transmission and distribution components of infrastructure. Transmission and distribution accounts for nearly half of all new spending, while another 30% is geared toward new power generation, according to PowerLines. "Our business model is hard to understand," said PG&E CEO Patricia Poppe in her most recent earnings call. "And it's hard for people to believe and see that you can raise profits and lower rates all at the same time." While most utilities are focusing more on affordability, PowerLines said, "many utilities remain concerned that there is only so far they can go to stop costs from spiraling out of control while still remaining profitable. They argue that without major capital investments in the power system, consumers risk paying for outdated, unreliable, and even dangerous energy infrastructure." But PowerLines also contends that utilities can and should do more to utilize the existing capacity of the power grid. Too often existing fossil fuel-fired power plants sit idle when demand is weaker, or renewable energy facilities generate power that's wasted -- such as the wind blowing hard overnight when people are sleeping. Before building too many new power plants, utilities should utilize more tools to make the existing grid more efficient, such as more battery storage, virtual power plants, and other technologies, such as AI-powered grid flexibility solutions that essentially reduce power consumption from large consumers at times of peak load demand on the grid. "Our century-old utility regulatory system has accelerated the size of the pie of utility capital spending, even when more cost-effective solutions that could lower consumers' utility bills are available yet under-deployed," Hua said. "It is incumbent upon state policymakers and regulators to ensure utilities prioritize these solutions that improve the efficiency, affordability, and reliability of the grid."