By Andrew Ye, investment strategist, Global X ETFs Europe
The US power sector is undergoing a major shift after nearly two decades of stagnant electricity demand. Between 2024 and 2040, demand is expected to rise by up to 50%, fuelled primarily by artificial intelligence (AI) data centres, expanding manufacturing, and the growing adoption of electric vehicles (EVs).
Meeting this surge will require a massive expansion of both electricity generation and grid infrastructure across the country; with utilities alone planning to invest at least $1.4trn between 2025 and 2030 to support this transition.
AI appears to be emerging as one of the most power-intensive drivers of demand for electrification. By 2028, data centres could consume up to 12% of total US electricity, nearly triple their share in 2023. This rapid growth stems from two factors: the increasing number of data centres needed for AI applications and the significantly higher energy requirements of AI-focused facilities. While a traditional data centre rack uses about as much power as three homes, high-density AI racks can consume the equivalent of 80–100 homes.
See also: Keeping the lights on: How utilities are meeting AI’s energy needs
This creates a critical dependency: the pace at which power infrastructure expands may determine how quickly AI can scale. If utilities cannot deliver sufficient electricity fast enough, power availability could become a limiting factor for AI development, including data centres and semiconductor production. As a result, electricity is no longer just a utility: but has the potential to be a foundational component of technological progress.
Industry leaders have already highlighted that access to power, not computing capacity, is becoming the primary constraint in AI adoption and evolution. Microsoft CEO Satya Nadella said “the biggest issue we are now having is not a compute glut, but it’s power – it’s sort of the ability to get the builds done fast enough close to power.”
Market drivers
Beyond AI, two additional forces appear to be accelerating electrification. The first is manufacturing growth. The resurgence of US manufacturing, particularly in high-tech sectors such as semiconductors, is highly energy-intensive. Advanced fabrication plants can require enormous amounts of electricity.
A single semiconductor facility, for example, can consume as much power daily as a mid-sized city. With multiple large-scale projects planned across the country, industrial electricity demand is expected to continue rising. Forecasts suggest industrial consumption will grow steadily through 2026, maintaining roughly a quarter of total US electricity use despite increasing demand from other sectors.
See also: Mondrian’s Gan: Navigating changing energy markets
The second is the electrification of transportation. EVs are set to become a major contributor to electricity demand over the next 15 years. Adoption of EVs is expected to accelerate significantly in the mid-2030s, potentially accounting for around 10% of total US energy demand by 2040. Growth will likely be concentrated in certain regions of the US, such as the Northeast, Southeast, and California, where policy support and infrastructure development are strongest.
Deployment of capital
To meet these rising demands, utilities are ramping up spending at an unprecedented pace. Annual investments in power generation and grid infrastructure could approach $200bn in both 2025 and 2026. Over the 2025–2030 period, total investment is expected to reach $1.4trn, almost double the amount spent over the previous decade.
This investment is not only about expansion but also modernisation. Nearly half of US transmission infrastructure is over 20 years old, requiring upgrades or replacement. At the same time, utilities must strengthen grid resilience against extreme weather and climate-related disruptions, which are becoming more frequent and severe. In early 2025 alone, nearly half of US utility customers experienced power outages, many linked to extreme weather events.
The electrification of the US economy is being driven by a convergence of AI, industrial growth, and transportation shifts. Meeting future demand will likely require large-scale deployment of diverse energy solutions, including renewables, nuclear power, energy storage, and emerging technologies like hydrogen fuel cells.
Ultimately, electricity appears to be becoming a central pillar of medium-to-long-term economic growth and technological leadership. As demand accelerates, the ability to generate, deliver, and manage power efficiently will shape the trajectory of industries across the economy. This transformation presents significant opportunities for investors across the electrification value chain, from infrastructure developers to energy producers and technology innovators.
