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The PPM Blog

Artificial Intelligence (AI), Data Centers, and Electric Vehicles (EV): Challenges and Impact on U.S. Electricity Demand

a man wearing a suit and tie smiling at the cameraContributed by Isaac Smith, Principal, PPM Consultants

AI and EV are two acronyms that are used by pretty much everyone these days, from politicians to news media and even at the water cooler.  The two terms are somewhat synonymous whenever you hear anyone speak about the self-driving capabilities of Tesla’s or other high-tech vehicles, but they also have something else in common, both technologies require a tremendous amount of electricity, and nearly all of which is completely new demand.

It may come as a surprise so some, but U.S. electricity demand has basically been flat for the last two decades, thanks in part to more energy efficienct products (think LED lights as just one example). However, in the last two years the U.S. has actually experienced a significant increase in electricity demand, driven by the rapid growth of technologies such as AI, the proliferation of data centers (including crypto), and the rising popularity (some might say government mandated transition) of EVs.

AI, Machine Learning (ML) and Data Centers

The integration of AI and ML technologies into various sectors has been transformative, enhancing efficiency, automation, and decision-making processes. However, the computational demands of AI applications and ML algorithms, have contributed to a surge in electricity consumption. Large-scale AI models and training processes require immense computer power, often located in energy-intensive data centers. These facilities house servers, storage, and networking equipment that power the vast array of online services we rely on daily. The need for high-performance computing, data storage, and real-time processing has led to an unprecedented demand for energy, putting a strain on local power grids.

Currently data centers represent approximately 2.5% of U.S. electricity consumption, but by 2030, the demand, largely fueled by generative AI, is expected to increase to 7.5%.  In 2021, data centers consumed 220-230 Terawatt hours (TWhs).  To put this in perspective, the entire State of California consumes about 280 TWhs per year.  That’s a mindboggling amount of electricity consumed solely by data centers, but the number will continue to rise thanks to the ever-increasing connectivity of devices and vast amount of cloud storage we all consume each year.


The transition towards EVs has been touted as a pivotal component of the global effort to reduce carbon emissions and combat climate change. However, the mass adoption of EVs also brings about an increased demand for electricity. It may come as a shock to some, but EVs actually need power from the grid, and that power was probably created by the combustion of fossil fuels (coal, gas, diesel, etc.).  Charging infrastructure, both at homes and public stations, requires a substantial amount of power, planning and investment. As more consumers make the switch to electric vehicles, the grid must adapt to accommodate the additional load.

It should come as no surprise that California is widely regarded as the flagship state for EVs, mainly driven by the state’s 2035 mandate that all new cars sold must be zero-emission vehicles.  In 2023 California had 1.7 million EVs, a number that is expected to skyrocket to 12.5 million vehicles closer by 2035.

In August 2023 the California Air Resources Board (CARB) enacted the 2035 mandate, but just six days later, California’s power grid was so taxed by heat waves that an unprecedented, 10-day emergency alert warned residents to cut electricity use or face outages. The untimeliness of the mandate and the grid crisis sparked widespread skepticism across not only California, but the entire U.S.  Anyone with an ounce of common sense asked, “how can the state require residents to buy electric cars if the grid isn’t capable of supplying enough power to make it through the summer?”.  It’s apparent that the decision-makers weren’t elected based on their common sense!

According to the U.S. Energy Information administration, Californians own ~1.7 million EVs, a number that steadily increases each and every year.  However, California’s share of U.S. charging stations has remained flat since 2016.  When you put all that together, you find that California ranks second to last when it comes to the number of EVs per charging station.  California is reported to have 75 EVs per charging station, a number that has only worsened since 2016 when there were about 27 EVs per charging station in the U.S.

I’m sure you’ve all heard some story about the challenges associated with EV charging stations.  Whether it was California asking residents not to charge their EVs at home, during the hot summer of 2023 or EV owners finding out the hard way what extreme cold weather does to their batteries.  But the story with the most irony involves the U.S. Energy Secretary, Jennifer Granholm and her four-day EV road trip this summer where she travelled across the southeast to promote the administration’s transition to EVs and the large investment in EV charging infrastructure. As the Energy Secretary’s EV entourage travelled through the South, they quickly realized there was a lack of necessary charging stations.  In an effort to “plan ahead” her team had someone park a gas-powered car at a charging station in Georgia as a way to “reserve a spot”.  The only problem with that plan was a family with an infant in the sweltering Georgia summer heat, that needed to charge their own EV, took offense to the gas-powered car that was somewhat rudely parked at the charging station, so they called the police.  Apparently its not illegal in Georgia to park a non-EV at a charging station, so the police force could only laugh as the Energy Secretary’s team arrived to charge their vehicles but had to scramble to diffuse the situation.  The story is almost too good to be true, but it absolutely happened.

Challenges and Solutions

The surge in electricity demand from AI, data centers and the transition to EVs poses several challenges for the country’s energy infrastructure:

Grid Capacity and Reliability:

  • Aging power grids may struggle to handle the increased load, leading to potential outages and reliability issues. California is a prime example.
  • Investment in grid modernization is crucial to meeting rising demand.

Environmental Impact:

  • Besides the environmental impact concerns associated with manufacturing EV batteries, increased electricity consumption is a significant concern to many, particularly if the energy comes from non-renewable sources.
  • Encouraging the use of renewable energy for data centers and EV charging can mitigate the environmental consequences.


The increasing demand for electricity in the U.S. driven by AI, data centers, and EVs presents both challenges and opportunities. As the U.S. attempts to balance the move towards cleaner energy while also meeting the need for more reliable electricity, everyone from the Federal and State Governments to industry and even everyday citizens must take an educated approach that combines innovation, investment in infrastructure, and sustainable energy practices. If we can address these challenges with the necessary patience and using fiscally viable technological solutions, the U.S. can ensure a reliable, resilient, and environmentally conscious energy future.

Links to other articles or websites on this topic are provided below.

National-Load-Growth-Report-2023.pdf (

Electric cars have a road trip problem: slow and unreliable charging : NPR

EV drivers wrestle with cold weather sapping their battery range (

Homepage – U.S. Energy Information Administration (EIA)

California leads the United States in electric vehicles and charging locations – U.S. Energy Information Administration (EIA)

Can California’s grid handle 12 million electric cars? – CalMatters

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