EY-Parthenon
Tom Flaherty is Senior Advisor at EY-Parthenon and author of Bright Moves: How U.S. Utility Innovation is Driving the CleanTech Transition. Jag Mukherjee is an Executive Director with EY-Parthenon.
In 2020, a proliferation of data center development that would reset multiple industry agendas was not on the electric power sector’s radar. Yet it occurred and led to a growth surge not seen since the halcyon period of seven and a half percent to eight and a half percent compound annual growth rates (CAGRs) between the 1950s and the 1970s. Unfortunately, energy demand gradually began declining to a two percent to three percent CAGR by the end of the 1990s, then shrinking to less than one percent annual growth from the early 2000s to 2020s, according to the U.S. Energy Information Administration.
But since the early 2020s, the rate of growth from data centers, load demand, and capital commitment has revitalized the electric power sector and dominates financial, technical, and industry press headlines, with some analysts anticipating growth rates approaching five percent over the decade from 2020 to 2030.
A rapidly growing niche industry suddenly emerged and exploded onto front pages and simultaneously into discussions by boards of directors, utilities, developers, financial institutions, and state government. Continuing headlines reflect how expectations are elevating to new levels, impacts are advancing in scale, and events are accelerating in speed.