S&P Global Warns: US Power Grid Strained by Data Center Explosion
Hyperscale data centers are surging in US power consumption, but political opposition and grid reliability issues are roadblocks.
The United States is witnessing a shift in its energy landscape. After decades of flat electricity consumption, a massive surge in demand is being driven by the rapid growth of hyperscale data centers. A new report from S&P Global highlights that this expansion is not only pushing the limits of the US power grid but is also triggering political and social backlash.
The Numbers: A Massive Surge in Consumption
The demand for electricity is skyrocketing. According to projections from the US Energy Information Administration (EIA), electric generating capacity is expected to grow at a compound annual growth rate of over 5 percent through 2028. This growth is fueled by the need to add nearly 50 gigawatts (GW) of new capacity specifically for data centers.
S&P Global estimates that electricity demand from data centers will nearly double, climbing from roughly 280 terawatt-hours (TWh) in 2024 to 530 TWh by 2028. By that time, data centers could account for anywhere between 6.7 percent and 12 percent of the total electricity consumption in the United States.
Political Backlash and the "Anti-Data Center" Wave
While the industry is growing, it is hitting a wall of political opposition. Following the 2026 midterm elections, public sentiment has turned sharply against these massive facilities. In a striking trend, voters in 40 out of 41 local ballot races on November 3, 2026, voted to restrict or prohibit new data center projects.
Analysts at BMI warn that over half—approximately 53 percent—of the US hyperscale pipeline is now at risk of slowing down. This is particularly evident in states like Texas, Georgia, Ohio, and Pennsylvania, where newly elected governors have taken a hardline anti-data center stance.
Grid Reliability and Infrastructure Bottlenecks
The rapid expansion is creating dangerous pressure on the grid. A critical incident on July 22, 2026, underscored these vulnerabilities. In Northern Virginia, nearly 3,900 megawatts (MW) of data center demand suddenly shifted to backup power due to transmission disturbances. This event has forced PJM Interconnection to consider implementing stricter requirements for how these facilities operate electrically.
Beyond the power generation itself, the industry is facing severe infrastructure bottlenecks. Reports from the Department of Energy, the Federal Energy Regulatory Commission, and the North American Electric Reliability Corporation indicate that there are critical shortages of large transformers and grain-oriented electrical steel, alongside lengthy interconnection queues and permitting hurdles.
The Impact on Consumers and Utilities
Utilities are scrambling to respond. Some, like DTE Energy, are selling non-utility assets to fund multi-billion dollar infrastructure upgrades. Others are implementing special tariffs to manage the load. While many residents believe data centers are are driving up their electricity bills, academic research from Harvard and the University of Pennsylvania suggests otherwise. Their research indicates that data centers have only had a marginal 4 percent impact on residential rate increases over the last five years, compared to a 15 percent impact on industrial prices.
S&P Global cautions that utilities are now heavily dependent on a concentrated customer base. This creates a credit risk; if the regulatory environment becomes more hostile or if demand shifts, the utilities' financial stability could be threatened.