For over a century, the electric grid has powered the world—fueling homes, industries, and economies. Yet today, utility leaders face an unprecedented convergence of challenges: Surging energy demands, increasingly variable supply from renewables, growing climate volatility, as well as the growing need for resilience and cost control. At the same time, the rise of artificial intelligence (AI) could open a new era of opportunity, transforming grid management from a reactive, manual process into a proactive, intelligent system.
This article explores the impact AI could have on the electric grid, from boosting operational efficiency to enabling new business models like virtual power plants (VPPs), all while ensuring security and reliability.
Over the past couple of years, AI—a long-studied technology—has found its way to both mass-scale consumer adoption and enterprise implementation. To facilitate the capability and scale of AI, there needs to be a growing supply of reliable energy. Modern data centers require a greater power density than ever before—estimates show that use of commercial AI technologies like large language models (LLM) and AI agents will contribute to roughly 3-6% of the total energy demand by 2030[i] with a 40% CAGR from 2025-2030.[ii] The growing deployment of ancillary devices such as uninterruptible power supplies (UPSs), backup generators, and cooling systems exacerbates this growth. However, there is a flip side: While AI is accelerating energy demand, it holds the potential to manage the grid more efficiently too.