US electric utilities are significantly increasing their capital investment plans to expand power generation and strengthen the grid as AI and cloud computing drive up electricity consumption.

Companies such as PPL Corp, Dominion, and Exelon have revised their spending plans upward, with PPL announcing a nearly 40% increase to$20 billion through 2028.

The surge in demand is largely fuelled by data centres, which are now being built at an unprecedented scale, reaching capacities of up to 1 gigawatt per site.

Utility executives have dismissed concerns that market disruptions, such as Chinese AI startup DeepSeek's recent emergence, would weaken demand from major tech firms.

Instead, companies including American Electric Power (AEP) and Duke Energy have received assurances from technology customers that their expansion plans remain unchanged. AEP is considering adding$10 billion to its existing$54 billion capital plan, while Duke is increasing its five-year spending by$10 billion.

Rising demand for electricity is expected to reach record levels in the US by 2026, driven not only by data centres but also by manufacturing and electrification in sectors like transportation.

While utilities race to expand power supplies, regulatory approval remains a challenge, and increased investment could lead to higher electricity costs for households and businesses.

Some utilities are also exploring whether data centres should bear a greater share of the costs associated with grid expansion.