BloombergNEF doubles its data center power forecast as regulators cap utility rate increases at two-thirds of requests
US grid investment faces a political ceiling as state regulators approved only 66% of utility rate increase requests last year, even as power demand projections keep rising.
BloombergNEF's latest forecast for data center power demand has come in at nearly double what the firm projected in December, exceeding what its analysts expect the grid to accommodate, according to reporting published on 2026-07-24. That revision lands against a regulatory backdrop where utilities are already losing the rate case battle.7
Investor-owned utilities sought $18 billion in rate increases last year — the most since the mid-1980s — and state regulators approved only 66% of the dollar value requested, according to Columbia University researchers drawing on the Lawrence Berkeley National Laboratory report released in the week of 2026-06-15. Electricity prices rose 6% in nominal terms last year, more than twice the rate of inflation.6
The LBNL researchers put data center electricity consumption at between 9.5% and 15.3% of all US power by 2030, up from 4.7% in 2024. That range is already above the 6.7% to 12% forecast the same researchers made two years ago for 2028 — meaning the trajectory has shifted faster than their own prior estimates suggested.6
The IEA reported this April that electricity demand from data centers rose 17% last year, with demand from AI-hosting facilities rising even more substantially. Global AI-focused data center electricity consumption surged 50% in 2025, the agency said. Data centers now account for roughly half of incremental US power demand growth, the IEA noted in its global energy assessment.3,1
The grid is not keeping pace. Only 13% of the interconnection capacity that submitted requests between 2000 and 2019 had reached commercial operations by end-2024, while 77% of those requests had been withdrawn, according to industry data.1
Part of the problem is structural. Under traditional utility regulation, utilities receive a roughly 9% to 10% return on capital investments, which "rewards capital deployment more than system optimization," the Columbia researchers said. Building new infrastructure generates returns; maximizing throughput from existing lines does not. The incentive runs in the wrong direction for a grid under capacity pressure.6
Cheaper paths exist but are not being taken. Analysis in the Proceedings of the National Academy of Sciences estimates that replacing existing transmission lines with advanced conductors could produce $180 billion in savings by 2050, a figure the Columbia team included in its commentary published on 2026-06-23. Grid-enhancing technologies and demand response could also ease near-term price pressure, the researchers said.6
The political layer is tightening. Democratic governors including Pennsylvania's Josh Shapiro are taking fire from within their own party as they attempt to set ground rules for multibillion-dollar data center projects. The tension is straightforward: tax revenue and jobs on one side, voter anger at rising electricity bills on the other, with no obvious resolution in either direction.4
AI developers are not waiting for that resolution. Crusoe signed a $1.25 billion contract with startup Boom Supersonic for 29 jet-engine turbines to power data centers across the country, bypassing the interconnection queue entirely. Panthalassa raised $140 million to build buoy-like floating devices that house data centers and generate power offshore.5
Off-grid gas generation, however, runs into its own limits. Even a 4-6 gigawatt data center campus would consume only about 1 billion cubic feet per day of natural gas depending on turbine efficiency, the Atlantic Council noted, which constrains how much the sector can move the broader natural gas demand picture.2
The 66% rate case approval rate is the number worth watching. Regulators capping utility recoveries below request levels signals voter sensitivity to electricity bills, but it also reduces the capital available for the transmission upgrades that connecting new data center capacity requires. Advanced conductor savings and grid-enhancing technology remain largely unrealized while the interconnection queue keeps shedding applicants. Whether Pennsylvania's Shapiro, already politically exposed on this issue, holds the line or accommodates further utility requests in coming quarters will give other governors a reference point — and give the market a clearer read on how much of BloombergNEF's revised demand forecast the regulated grid can actually absorb.4,67