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Key Facts on AI-Powered Electricity Demand
Major tech companies such as Amazon, Microsoft, Meta, and Alphabet are expanding their data center operations, leading to a projected electricity demand increase of 20% to 50% in high-growth regions like Texas by the 2030s.
In response to this surge, tech firms are entering multi-gigawatt long-term power purchase agreements (PPAs). For example, Microsoft signed a 20-year PPA with Constellation Energy for the Crane Clean Energy Center in Pennsylvania, while Meta secured a similar agreement for a 600 MW solar farm in Texas.
Annual peak demand for electricity is expected to average a growth rate of 3% over the next five years, significantly higher than the past two decades’ average of just under 1%. The Vanguard Utilities ETF (NYSEMKT: VPU) aims to capitalize on this trend by offering exposure to U.S. utility companies likely to benefit from rising energy needs related to AI data centers.
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