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Analysis
US as the next 'electrostate' and the role of the Permian Basin
The growth in US power demand is surging to its highest rate in decades, driven first by the electrification of oil and gas production and then by the build out of data centers. While still below the 5-10% growth seen in China, the world’s first “electrostate," the US power sector is experiencing rapid structural growth. The country is delivering more than a 3.5% annual power demand growth rate for the first time in several decades, potentially positioning the US as the world’s next “electrostate,” despite the strong oil and gas focus of the Trump administration.
Nationwide electricity consumption increased by around 200 terawatt-hours (TWh) in the last 10 years, with data centers already accounting for about 50% of the growth. Our updated assessment suggests that in the next decade, growth is likely to be four times faster, with more than 800 TWh of consumption added between 2024 and 2034. We expect the commercial sector – largely data centers – to drive ~60% of the growth. Meanwhile, the electrification of the transport, industrial and residential sectors are expected to deliver 90-150 TWh of growth each.
While the market attention is focused predominantly on these data centers, we note that the electrification of the Permian Basin has been one of the most significant contributors to the nationwide demand growth in recent years. In fact, there is no other load zone in the country that has experienced the roughly 4 GW increase in average demand that Texas has seen since 2021. This translates into 30-35 TWh of added consumption and accounts for the entire industrial demand growth in Texas in the last four years.
Using a combination of industry surveys, public data and Rystad Energy’s proprietary data tools and models, we have been able to deconstruct the current 7.5 GW of Permian Texas grid power demand into individual contributors. Roughly 2.5 GW comes from residential and commercial sectors in West Texas and ~30% of that came on the back of accelerated Permian oil and gas development since 2017-2018. Upstream pad operations (mainly electric submersible pumps and other pad equipment) and gas compression contribute with ~2 and ~1 GW to the demand, respectively. The remaining 2 GW comes from direct electricity use at gas power plants, other oil and gas midstream facilities and liquids transmission. Some of these segments are positioned for significant growth in 2025-2035 regardless of oilfield activity outlook amid ongoing electrification of the basin. Hence, the Permian Basin will inevitably remain a critical contributor to nationwide demand growth.
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