OnLocation, A Division of KeyLogic

This Data Center Updated Scenario analysis was performed using OnLocation’s version of the National Energy Modeling System (OL24-NEMS), a customized and enhanced version of the NEMS model developed and maintained by the U.S. Energy Information Administration. We compare two scenarios to examine the impact of expected data center demand growth on the U.S. electric power supply and on select regional power markets: ◾ High Growth Reference (REF): The Energy Horizons data center high growth scenario (from our September report) includes energy policies such as the Inflation Reduction Act (IRA) and EPA Clean Air Act 111 greenhouse gas regulations. ◾ High Growth with Alternative Policies (ALT): The same high growth as the REF scenario but without IRA incentives for renewable energy and no EPA 111 regulations for fossil generation. Download the new report here. 👉 https://bit.ly/3FmwAtr

The potential savior for fossil generators is the growth in power demand and the characteristics of that demand. For decades growth in U.S. electricity demand has been minimal. For the period 2000 – 2023, growth in electricity sales averaged only 0.5% per annum. For six of the 10 years between 2014-2023, electricity demand growth was either zero or negative. But these trends are about to reverse. EIA’s short-term estimate as of January 2025 is that electricity sales increased by 2.2% in 2024 and will grow another 2.1% in 2025. OnLocation’s Energy Horizons study forecasts that this will kick-off robust electricity sales growth continuing to mid-century. Growth is expected to average 1.7% annually (2025-2050). This rate might not seem that high, but by 2050 the change is dramatic, with total sales more than 50% higher than in 2025 (from 3,956 to 6,059 billion kWh). A large chunk of the demand growth is expected to come from data centers, turbocharged by AI computing. Learn more 👉 https://bit.ly/412Yi6B

Why are the Data Center (DC) and AI developers interested in nuclear power? In addition to the quest for clean dispatchable energy, it is likely that they aim to reduce future supply risks by diversifying their electricity sources. The prospects for natural gas may be particularly uncertain if the effects of climate change become more severe. Another factor is that they have the money to play the nuclear game. Learn more 👉 https://bit.ly/411e9mO

These fuels – from crop waste and dung on the left, to charcoal and coal in the middle of the visualization, are termed ‘solid fuels’. The other fuels, on the higher steps of the energy ladder, are termed ‘clean fuels’. When we track the share of households using clean fuels for cooking – an important metric in energy access – this is the definition of clean fuels that is used. Why is access to clean fuels so important? Burning solid fuels on open fires or simple stoves fills the room with smoke and toxic chemicals. These traditional energy sources expose those in the household – often women and children – to pollution levels that are far higher than in even the most polluted cities in the world. This indoor air pollution leads to millions of deaths every year. - Our World in Data

Coal Power: Is the Decline Slowing? For decades, coal-fired power generation has been in decline, facing economic pressures, policy shifts, and competition from renewables. However, new factors—rising electricity demand, AI-driven data center growth, and a more fossil-fuel-friendly administration—could be slowing the pace of retirements. Key takeaways from our latest analysis: 🫠 Coal capacity has dropped ~45% from its peak but some planned retirements are now being delayed. 🫠 AI & data center growth is increasing power demand, impacting retirement decisions. 🫠 Policy changes & carbon capture could play a role in coal’s future stability. 🫠 By 2050, coal could make up just 6.6% of U.S. electricity generation—unless utilization rates increase. Will coal power fade into near irrelevance, or could market forces and policy shifts keep it in the mix longer than expected? Read the full report here: Coal Power: Decline or Stability? What are your thoughts on coal’s future in the U.S. energy landscape? Let us know in the comments. #EnergyMarkets #CoalPower #PowerGrid #EnergyPolicy #OnLocationInsights #EnergyModeling

There is certainly a lot of potential with enhanced geothermal technologies that are just now making the technological breakthroughs necessary to bring this form of energy closer to population centers.

𝐔𝐬𝐢𝐧𝐠 𝐁𝐚𝐭𝐭𝐞𝐫𝐲 𝐓𝐞𝐜𝐡𝐧𝐨𝐥𝐨𝐠𝐲 𝐭𝐨 𝐓𝐚𝐫𝐠𝐞𝐭 𝐔𝐧𝐝𝐞𝐫𝐠𝐫𝐨𝐮𝐧𝐝 𝐇𝐲𝐝𝐫𝐨𝐠𝐞𝐧 𝐏𝐫𝐨𝐝𝐮𝐜𝐭𝐢𝐨𝐧 The University of Southern California is adapting oil and gas techniques to optimize extraction. Eden GeoPower is exploring subsurface battery technology to enhance production. Subsurface battery technology refers to an innovative approach where electrochemical systems are deployed underground to manipulate geochemical conditions, thereby stimulating production. This technology leverages controlled electrical currents to alter redox conditions in geological formations, enhancing reactions that release hydrogen from minerals or organic matter trapped within rock structures. By acting as an in-situ energy storage and delivery system, subsurface batteries can facilitate continuous or pulsed energy input directly at the reaction sites, optimizing the efficiency of hydrogen generation processes. This method could be useful in deep geological environments where traditional surface-based stimulation techniques can be less effective due to energy dissipation over distance. Learn more 👉 https://bit.ly/3EAswp7

The digital transformation is driving a rapid increase in data center energy demand for artificial intelligence (AI) training and user applications, cloud computing and storage, and cryptocurrency mining operations. In September 2024, OnLocation released an Energy Horizons Special Report, Data Center Demands & Impacts on the Energy System, that provided an initial look at how data center demands may impact the future of the U.S. energy system. The report examined results from scenarios that incorporated existing energy and environmental laws and regulations. Many of these policies are being reconsidered by the new Administration, so we created an updated report focused on an alternative scenario that provides a snapshot of how increasing electricity demand of data centers may be met under this evolving policy landscape. Download the new report here. 👉 https://bit.ly/3FmwAtr

The main thrust of the energy market, in the Unites States and abroad, seems to be heading in the direction of an increasingly solar future. In a recent special report on the global adoption of solar power, The Economist described the global adoption of solar power as nothing less than “revolutionary” in the history of energy and industrial development. The Economist found, crucially, that solar PV is becoming so inexpensive that solar market expansion is no longer entirely dependent on climate policy; it can often stand on its own as an option for new capacity. Learn more 👉 https://bit.ly/4i89sNv

A common characteristic of a conventional Data Center (DC) and the new AI demand is a requirement for an absolutely reliable and continuous electricity supply, in order to provide 24/7/365 service to customers. This has driven many DC/AI vendors and the utilities that service them toward dispatchable natural gas-fired generation. To avoid lengthy utility interconnection queues, some DC/AI facilities are aiming to locate near natural gas pipelines that can supply fuel to dedicated combined cycle plants. DC/AI demand has also contributed to decisions to delay the retirement of some coal-fired generators, at least for a few years. Learn more 👉 https://bit.ly/411e9mO