The US power sector is expected to spend a record $212.1 billion on capital expenditures (capex) this year, representing a 22.3% increase from last year, according to data from Jefferies. This surge in investment marks an impressive 129% rise since 2012.
Industry analysts attribute the trend to the growing demand for electricity from data centers, which is driving companies to invest heavily in generation and transmission infrastructure. “We’re now seeing a very meaningful shift,” said Julien Dumoulin-Smith, Jefferies power utilities analyst. “Over the last couple of decades, we’ve seen a relative paucity of new investment… but should see a sharp uptick as data centre deployment accelerates.”
The investment boom is expected to continue in the coming years, with Wood Mackenzie predicting that annual investment in transmission and distribution infrastructure will nearly double from $50 billion in 2016 to over $100 billion by 2025. However, challenges such as supply bottlenecks and a global shortage of transformers are emerging.
To address these issues, companies are racing to build more gas-fired generation capacity to secure reliable baseload electricity for data centers. Rystad Energy reports that the planned gas generation projects within utility companies have increased from 6 GW in late 2023 to 17.5 GW currently, the highest level since 2017.
The investment surge is driven by the growing importance of data centers in modern economies, and analysts expect this trend to continue in the coming years.
Source: https://oilprice.com/Energy/Energy-General/Data-Center-Demand-Fuels-Unprecedented-Utility-Investment.html