The rapid growth of data center electricity demand combined with supply bottlenecks for key grid equipment could strain global power systems, according to McKinsey’s Global Energy Perspective 2025 report.

The report estimates that data center electricity demand will increase by around 17% per year between 2022 to 2030. For example, 14% of total power demand within the United States will come from data centers according to the country’s Continued Momentum scenario. 

McKinsey mainly attributes this surge to the growth of artificial intelligence workloads, cloud computing, and digital infrastructure. All of which are common factors that reshape consumption patterns across major economies worldwide.

Simultaneously, the report also warns growing concerns in the physical infrastructure needed to support the ever-increasing grid. For instance, high-voltage transformers costs have increased by two- to threefold since 2020, with lead times stretching from six months to two years.

These supply chain issues can cripple transmission buildout, renewable energy interconnections, and overall grid upgrades, despite strong market investment and policy support.

The report then goes on to state that the major bottleneck in the energy transition may not be generation capacity, but grid readiness instead, as hardware limitations continue to become a more prevalent factor.

For emerging markets such as the Philippines, the findings carry genuine weight as the country positions itself as a digital infrastructure hub while expanding its renewable energy capacity, both of which require robust transmission systems and reliable baseload supply.

Growing electricity demand from hyperscale data facilities might put additional pressure on reserve margins and substation capacity, especially if grid upgrades are entangled with procurement delays amidst global competition for transformers and other equipment.

As Southeast Asia accelerates solar, wind, and battery storage deployment, access to grid hardware and transmission infrastructure could become a decisive factor in how quickly new capacity comes online.

McKinsey notes that affordability and supply security are increasingly shaping transition pathways, highlighting that infrastructure constraints may influence how countries balance decarbonization ambitions with reliability concerns.

Can power systems, like the ones in the Philippines, expand fast enough to keep pace with AI-driven electricity demand without creating new reliability risks?

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