Global demand for electricity is climbing at one of the fastest rates in decades, up 4.3% in 2024 alone, according to the International Energy Agency (IEA).

Dec 09: A significant source of demand comes from data centers, where artificial intelligence is driving an unprecedented appetite for power. And while that story has captured the spotlight, there is another factor driving electricity demand: millions of electric vehicles.

In some countries, the growth in demand is putting strain on electricity grids because most people are charging at home.

“When consumers build out charging infrastructure in the residential electrical network, the consumer is forcing a utility to make significant investments in infrastructure in order to maintain reliability of the system network, as the number of vehicles needing charging increases,” said IEEE Senior Member Shawn Chandler.

How EVs Impact the Grid

By 2030, IEA expects more than 150 million electric charging stations to be installed worldwide, two-thirds of them private home chargers.

That pattern matters because home charging pushes demand directly onto local distribution circuits that were never designed for it. Chandler notes that a single EV battery can be 75 kilowatt-hours or more; recharging it in just a few hours can draw seven to ten times the load of a typical household.

While utilities have managed gradual increases in demand before, the sudden wave of EV charging is different. That’s why utilities are increasingly looking at “managed charging” programs — shifting charging times or spreading load across the day — as they plan for the next decade of electrification.

How Data Centers Drive Electricity Demand

The data centers that power artificial intelligence are expected to account for approximately 3% of global electricity consumption by 2030, up from 1.5% in 2024. But that demand could be uneven. A large, hyperscale data center may use as much electricity as a small city, and many data centers are clustered in tight geographic areas.

“AI data centers require extremely high and concentrated loads,” said IEEE Member Mauricio Salles. “They pose challenges for transmission system operators. The production of green hydrogen, the electrification of transportation and the electrification of everything also contribute to this increase.”

And because data centers tend to be clustered in developed countries, that means they will likely take up a greater proportion of electricity in those countries, in some cases up to 9%. In developed countries, for every five megawatts of new electricity that comes online, one is dedicated to data centers. In developing countries, that figure is one in twenty.

That buildout of data centers shows no signs of slowing down, at least for the next few years. In “The Impact of Technology in 2026 and Beyond: an IEEE Global Study,” a recent survey of global technology leaders, close to half (49%) of respondents expected that it would take five to seven years to build the global data center infrastructure required to meet growing AI development and demand.

“Because of the rapid growth of AI and worldwide demand for its use, more and more electricity will be needed to maintain AI systems,” said IEEE Senior Member Otavio Andre Chase.

Other Sources of Electricity Demand

Artificial intelligence and electric vehicles aren’t the only sources of new electricity demand.

Increasingly, manufacturing and infrastructure have come to rely on electricity as a power source, rather than fossil fuels. That means that while demand for electricity is increasing, it doesn’t directly translate to overall energy demand.

To meet demand while maintaining clean energy goals, experts have increasingly looked toward nuclear power, alongside wind and solar energy.

“The need to combine wind and solar with traditional generation is on the table,” Salles said. “The balance lies in creating a generation portfolio that is clean but also flexible enough to handle the variability of renewables. Ideally, climate goals and energy planning would be integrated so that capacity expansion simultaneously meets growing demand and emissions reduction obligations.”

Keeping The Grid Reliable

Aside from building additional capacity, grid operators and utilities are exploring a couple of other strategies.

At the top of the list is the force of markets, incentivizing EV owners to charge during off-peak times by charging less. Data centers are also shifting workloads to off-peak hours. Those sorts of incentives, usually referred to as dynamic pricing or managed charging, often require regulatory approval.

Scottish utilities also successfully demonstrated the ability of massive, grid-scale batteries to help smooth power demands. They’re also modernizing transmission lines and transformers to be able to handle the load.

Salles said utilities need to expand the use of transmission and distribution systems and adopt high sophisticated load forecasting systems.

“It is crucial that the entry of new intensive electricity demand centers be coordinated with the expansion of the necessary infrastructure,” Salles said.

Grids are also crossing national borders.

“Interconnection with other electrical systems also brings improvements in flexibility and energy exchange between locations with surpluses and deficits,” Salles said.