The Future of Data Centers and Powering the AI Revolution

In the ever-expanding digital landscape, the data center has become the beating heart of our AI-driven world. From generative AI models to cloud computing and the rise of electric vehicles, the demand for data processing power has never been greater. But behind the sleek user interfaces of ChatGPT, autonomous vehicles, and cloud-based business solutions lies an industry grappling with a massive challenge: power. 

Goldman Sachs Research said on average, a ChatGPT query needs nearly 10 times as much electricity to process as a Google search. In that difference lies a coming sea change in how the world at large will consume power — and how much that will cost.  

For years, data centers displayed a remarkably stable appetite for power, even as their workloads mounted, according to Goldman Sachs. Now, as the pace of efficiency gains in electricity use slows and the AI revolution gathers steam, Goldman Sachs estimates that data center power demand will grow 160% by 2030. 

The "Data Centers, Generative AI & Power Constraints: The Path Forward" report by TD Cowen Analyst Michael Elias – Keynote Speaker at the Pennsylvania Data Center and Energy Innovation Summit – paints a compelling picture of a sector on the brink of transformation. By 2030, the data center industry will require an additional 65 gigawatts (GW) of power capacity, consuming over 600 terawatt-hours (TWh) of electricity annually. These numbers underscore a key issue: Can the world’s electrical grids keep pace with the insatiable energy needs of AI? 

"The energy demands we are facing are not just significant—they are staggering. As data centers multiply to fuel our
innovation economy and technological revolutions, we are approaching an inflection point that demands immediate attention and bold leadership," said Audrey Russo, President and CEO of the Pittsburgh Technology Council. "The Tech Council is not just superficially concerned—we are mobilizing. As thrilled as we are to launch the inaugural Data Center and Energy Summit, Pennsylvania stands at a crossroads where we can either lead or follow. 

"This is not about abstract future planning—it is about seizing concrete opportunities at this very moment.  Having Elias present his groundbreaking report center stage will of course be informative—it's the essential catalyst we need to transform conversation into action. The future of our Commonwealth's technological and economic leadership depends on the paths we chart today, right now."

The AI Boom and the Electricity Bottleneck 

The explosion of AI, particularly generative AI models like OpenAI’s ChatGPT, has created an unprecedented surge in computing demand. These models require immense computational power, both during training and inference.  

“Across the U.S., data center expansion is straining the power grid. Pennsylvania already hosts 71 data centers, with more on the way. Virginia, where data centers consume nearly 25% of the state’s electricity, offers a glimpse into Pennsylvania’s potential future,” said Mark Schneider of Williams (Read more of his insights on page 14). “As data centers grow, energy demand will rise, forcing utilities and policymakers to rethink energy infrastructure. Without proactive measures, both data centers and consumers may face rising energy costs and grid instability.” 

Mason Emnett, Senior Vice President, Public Policy, Constellation Energy, sees the increased energy demand from the data economy as a significant opportunity for Pennsylvania. He notes that Pennsylvania is well-positioned as a net exporter of energy within the broader PJM Interconnection market. PJM oversees power distribution for Pennsylvania and many of its neighboring states. 

“The demand is enabling major investments in Pennsylvania's energy infrastructure, such as the $1.6 billion Crane Clean Energy Center project at Three Mile Island,” said Emnett. 

Chris Massetti, President of Donwil – a Pittsburgh-based provider of cooling systems for data centers – can’t emphasize enough the significant energy demands of AI, robotics, and digital infrastructure will create around the globe. He advocates the need for better partnerships with the government and responsibly leveraging Pennsylvania's abundant natural gas resources and improving infrastructure to attract major tech and energy investments for the Pittsburgh region. 

“A lack of cooperation between the government and industry could stall growth,” Massetti said.

The Great Power Hunt: Where Will Data Centers Go? 

The biggest data center hubs—Northern Virginia, Silicon Valley, Dallas, and New Albany, Ohio—are already facing electricity bottlenecks. In Northern Virginia, the world's largest data center market, reliable electricity supply could be exhausted by winter 2027, according to the TD Cowen report. In Silicon Valley, a region synonymous with innovation, power shortages are expected by 2034. These constraints are forcing the industry to rethink its strategy. The TD Cowen report identified five key solutions that data center operators are already pursuing to secure power for future expansion: 

Building data centers where power is available. New markets in the Midwest and other regions with surplus electricity are attracting investment. 

Repurposing old industrial sites. Former manufacturing facilities with existing high-voltage transmission lines are being converted into data center hubs. 

Investing in transmission infrastructure. Companies are financing power grid upgrades to ensure reliable electricity
access. 

Exploring on-site power generation. Some data centers are deploying natural gas or nuclear-powered generation to sidestep grid limitations. 

Developing small modular nuclear reactors (SMRs). Hyperscalers like Microsoft and Amazon are exploring nuclear energy partnerships to sustain long-term growth. 

Why Pittsburgh and Pennsylvania Are Poised to Lead 

As data center operators search for new locations with strong infrastructure, Pennsylvania—and Pittsburgh in particular—have emerged as prime contenders for the next wave of AI-driven data centers. 

"The Pittsburgh region is uniquely positioned to take advantage of the data center opportunity, given our abundant energy resources and our leadership in AI and innovation," said Stefani Pashman, CEO, Allegheny Conference on Community Development. "From our roots eight decades ago when Westinghouse built the first commercial power station in our region to today’s eVinci microreactor developed in our backyard, to the untapped natural gas potential, we can fuel the AI revolution that will unlock immense economic benefit for our communities."

The region's unique strengths position it well as a natural hub for data center expansion: 

1. Energy Abundance and Infrastructure 

Pennsylvania remains one of the nation's largest energy producers, with an extensive natural gas network and significant nuclear capacity. The state ranks second in the U.S. for natural gas production, providing a critical baseload power source for data centers. Pittsburgh’s industrial legacy means that high-voltage transmission infrastructure is already in place, reducing the lead time required to power new facilities.  

Natural gas is already the largest source of electric power generation in the United States," said Jaclyn Presnal, Vice President of New Energy Ventures, Williams (Read more of her insights on page 12). She noted that it has been directly responsible for reducing 500 MM tons of CO2 in the power sector from 2005 to 2022 because of the switch from coal to gas-fired power plants.?  

2. Repurposing Industrial Sites 

Much like Quantum Loophole’s transformation of an old Alcoa smelting plant into a 2.4GW data center hub in Maryland, Pittsburgh’s many former steel mills and industrial sites offer ideal locations for conversion into next-generation data centers. These sites already have
robust electrical infrastructure, ample land, and proximity to major fiber-optic networks. Earlier this year, TECfusions acquired a former Arconic manufacturing site outside of Pittsburgh in New Kensington, to become its Keystone Connect campus. According to TECfusions’ website, the 1,350-acre New Kensington campus will total 500,000 sq. ft. (46,451 sqm) and offer 3GW of capacity at full build-out. 

3. Research and Innovation Hub 

Pittsburgh is home to world-class AI and robotics research, led by Carnegie Mellon University (CMU) and the University of Pittsburgh. These institutions not only produce top-tier AI talent but also foster partnerships between academia and industry, making the city a natural home for AI-focused data centers. 

4. A Thriving Tech Ecosystem 

Major tech firms, including Google, Meta, Amazon, and Duolingo, have established offices in Pittsburgh, further solidifying the region’s role as an emerging tech powerhouse. A growing network of startups and AI-focused companies could benefit from low-latency access to local high-performance computing infrastructure. 

5. Nuclear Power Leadership 

Pennsylvania is one of the top nuclear energy producers in the U.S., with multiple nuclear plants capable of supporting AI-driven data center growth. The state is also exploring small modular reactors (SMRs) as part of a broader clean energy strategy, aligning perfectly with the long-term energy needs of AI data centers. 

Speaking of Nuclear 

With traditional energy sources under strain, the TD Cowen report highlights nuclear power as a potential game-changer for the data center industry. 

“We do believe that it's possible to potentially have one of these new reactors online by the end of the decade, or the beginning part of the 2030s,” said Emnett referring to the
Microsoft/Crane Project at Three Mile Island. “We've got a lot of work to do on the permitting side and the development and construction side, but we're really excited about it!” 

"While large-scale nuclear plants are expensive and slow to develop, SMRs could be part of an array of energy sources to meet power demand," said Emnett, "to provide scalable, on-site energy solutions." Microsoft, in partnership with Ontario Power Generation, and Amazon Web Services, via Cumulus Data, are already making strides in this direction. 

However, the nuclear option is not without its challenges. Regulatory hurdles, public perception issues, and high upfront costs remain obstacles. But given the predicted 26% annual growth rate in data center power consumption, the industry may have no choice but to embrace nuclear solutions. 

Can the Grid Keep Up? 

Despite the daunting challenges, the TD Cowen Report remains cautiously optimistic. It notes that the industry is already adapting, with companies strategically relocating workloads, investing in alternative energy, and pushing the boundaries of efficiency.  

“When we look across our entire fleet, we can get probably about 1,000 megawatts of additional output from our fleet,” said Emnett. “That's a bit more than the Crane relaunch. So we could bring a new nuclear plant effectively online by upgrading, increasing the output from our facilities across the footprint." 

But without significant grid modernization, the road to an AI-powered future may be bumpy. As data centers become the defining infrastructure of the AI era, one thing is clear: Power is the new currency of the digital age. Whether through smarter grid investments, nuclear innovation, or geographic diversification, the next decade will be shaped by how we choose to fuel our digital future. 

Massetti warns that Pennsylvania cannot hesitate in creating the needed foundations to build power and data centers while other states like Tennessee, Texas, Georgia, and Oregon are attracting major AI and data center investments by streamlining regulatory processes. Massetti emphasizes that if Pennsylvania doesn’t act soon, it will continue losing out to more business-friendly states. 

"We can acknowledge those challenges, embrace them and overcome them, and having these types of conversations are critical to that, so people understand the benefits that we're getting with the new investment and the work that it's going to take in order to ensure that we're building out the energy infrastructure to power that investment," said Emnett.

And if Pittsburgh and Pennsylvania play their cards right, they could be at the forefront of this revolution.