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Can the energy industry step in to fix data centers' three key challenges?
The surge in artificial intelligence and digital infrastructure has turned data centers into the fastest-growing source of new electricity demand in North America. Grid operators and policymakers are racing to keep up, and for energy providers, this wave of demand could open new frontiers of opportunity.
Challenge 1: Capacity bottlenecks
Data center developers are demanding power within tight timelines, while interconnection queues for new generation and transmission projects can stretch for years. Some operators are now building private substations or developing on-site generation to accelerate delivery. For energy providers, the need for speed is creating opportunities to deploy flexible and rapidly scalable power solutions such as gas turbines, reciprocating engines and energy storage.
Challenge 2: Grid stability
Data centers are highly sensitive to even small voltage fluctuations, and recent incidents have already triggered large load losses. Regulators are tightening reliability rules, while the industry is investing in ride-through technology and on-site grid equipment. This opens a new opportunity for "stability as a service", where energy players supply not only power but reliability.
Challenge 3: Cost pressures
As utilities expand networks to meet surging demand, the cost of new infrastructure is putting pressure on electricity prices for all customer classes. Policymakers are exploring new cost-recovery models to protect consumers, but large power users are already taking action by moving behind-the-meter to control costs and improve price certainty. For energy providers, this shift creates demand for integrated, on-site solutions that balance reliability, cost and sustainability.
Data center growth is reshaping North America’s power landscape faster than grid and policy systems can adapt. Energy companies that deliver quick, innovative and cost-effective solutions will benefit most. Over time, carbon capture, storage and renewable integration will be key to sustaining this growth in a decarbonizing world.
Explore the full Rystad Energy commentary for detailed analysis, regional insights and data on how energy providers can capitalize on the challenges and opportunities created by datacenter expansion.
Authors:
Mike McCormick
Head of New York Advisory
mike.mccormick@rystadenergy.com
André Risnes Nordbø
Senior Consultant
andre.nordbo@rystadenergy.com