U.S. Data Center Power Market Landscape 2024-2029

MARKET OVERVIEW

The U.S. data center power market by investment was valued at USD 8.86 billion in 2023 and is expected to reach USD 17.14 billion by 2029, growing at a CAGR of 11.63% during the forecast period. AI adoption is booming across industries in the U.S., particularly in North Virginia, Atlanta, and Dallas, driving the rise of AI data centers to meet growing demands. Also, major tech giants, such as Google, Amazon Web Services (AWS), and Microsoft, significantly influence the market. Their growing investments in AI are expected to drive further growth in the coming years. Furthermore, in 2024, Atlanta surpassed Northern Virginia in colocation power absorption for the first time, reaching 815 MW compared with 603 MW, from JLL. Construction activity remains high despite concerns over power capacity, growing sevenfold in two years, with both primary and secondary markets continuing to expand.

KEY HIGHLIGHTS

1. A shift toward sustainability is evident in data center operations, driving the adoption of innovative solutions. Fuel cells in one such innovation in the U.S. data center power market. For instance, in 2024, Bloom Energy partnered with Intel Corporation to deploy fuel cell-based Energy Servers at Intel's Santa Clara data center, boosting its power capacity by several megawatts.
2. AI adoption is on the rise in the U.S., driving the expansion of AI data centers. U.S. President, Joe Biden endorsed Microsoft's USD 3.3 billion investment in an AI data center in Racine, Wisconsin, emphasizing that it will generate 2,300 construction jobs and 2,000 permanent positions.
3. Growing industrial demand has caused the U.S. government to raise electricity prices, affecting data center operations. For instance, average energy costs increased from USD 0.169 per kWh in July 2023 to USD 0.178 per kWh in July 2024.

SEGMENTATION INSIGHTS

1. U.S. developers aim to boost battery storage capacity to over 30 GW by the end of 2024, outpacing petroleum liquids, geothermal, and wood-based energy. California leads with 7.3 GW, followed by Texas at 3.2 GW, while other states contribute 3.5 GW, driven by the rise in wind and solar energy generation.
2. Diesel generators remain the preferred option in the U.S. data center power market, though some are transitioning to gas generators. TC Energy Corporation, a major North American natural gas pipeline operator, predicts that the growing energy demands of data centers will drive a significant increase in natural gas use for electricity generation in the US.

REGIONAL ANALYSIS

1. Rising investments in cloud and colocation services in the U.S. drive the demand for next-generation generators. In 2023 and 2024, Northern Virginia and the Midwest notably increased their adoption of advanced power infrastructure.
2. Northern Virginia, Dallas, and Silicon Valley lead in adopting diverse fuel options, such as DRUPS systems, fuel cells, and natural gas. Hitachi Energy, FuelCell Energy, and Bloom Energy drive innovation, improving data center efficiency through strategic collaborations.

VENDOR LANDSCAPE

1. The US data center power market is highly competitive, with major players such as ABB, Eaton, and Schneider Electric leading in power infrastructure. Cummins, Hitachi Energy, and Caterpillar dominate the generator segment of the U.S. data center power industry.
2. In 2024, global investors are expected to lead significant mergers & acquisitions (M&As) in the data center sector, driven by the need for digital infrastructure driven by artificial intelligence (AI). This trend is anticipated to promote renewable-powered infrastructure and boost the UPS and generator markets in the Southwestern, Western, and Northeastern U.S. to tackle power challenges.
3. Data center operators in the U.S. are expected to invest more than USD 49 billion in new power generation to meet data center demands. Experts suggest that data centers will drive more than 3 billion cubic feet per day of natural gas demand by 2030, necessitating additional pipeline capacity in the US.