Schneider Electric has signed deals worth approximately $2.3 billion with two U.S. data center operators to mitigate the surge in electricity demand from AI-driven data center load, straining U.S. utilities. Schneider Electric announced on Wednesday that it signed approximately $2.3 billion worth of new contracts with two U.S. data center operators. The firm is set to provide cooling and power systems to Switch while providing UPS and switchgear for Digital Realty. Schneider Electric lands $2.3 billion data center deal At its Innovation Summit in Las Vegas, Schneider announced a $1.9 billion agreement with Switch, a privately held technology company. The purpose of the deal is to deliver power modules and advanced cooling systems. The company also struck a $373 million agreement with Digital Realty, a major data center operator based in Texas. The contract covers uninterruptible power supplies (UPS), switchgear, and ready-made power systems. Both contracts are expected to be fulfilled in phases over 2025 and 2026. With these deals, Schneider now not only provides server tracks, but also power and cooling systems, which makes the company even more of an important supplier for data centers. According to Schneider , the current data center infrastructure was not designed to handle the power and cooling demands of AI. The company’s Las Vegas cooling deal with Switch is its largest in North America to date, and is designed to handle intense workloads efficiently without “proportionally increasing energy demand,” according to Vandana Singh, a senior exec at Schneider. The U.S. is currently struggling to keep up with the power demands of data centers run by big tech companies, and Schneider itself has warned that without upgrades, the national grid could face serious constraints. Analysts at Morgan Stanley believe that global power demand from data centers could nearly triple in the next three years. A report by Dell’Oro Group shows that in the first quarter of 2025, the data center physical infrastructure market grew 17% year over year. Alongside all these plans, Schneider is also collaborating with Nvidia to design cooling systems for its most powerful AI chips. The grid strain issue While the contracts are major wins for Schneider, they also highlight the increasing strain on the U.S. power grid due to the rapid expansion of AI data centers. According to Schneider , data centers already consume 4.4% of U.S. electricity, and that share could more than double by 2028. Analysts from Data Center Dynamics also reported Schneider Electric’s research, which estimates that AI energy consumption could reach between 14 and 18.7 gigawatts by 2028. Grid planning experts believe that the problem isn’t just generating the energy but also managing it correctly. For instance, overconcentration of demand in certain areas can create transmission jams, but some new research suggests that data centers themselves might help ease this stress if they are not all clustered in one place. Bloomberg Intelligence reports that demand for data center electrical infrastructure could rise by 25% in 2025, with a projected compound annual growth rate (CAGR) of 12% through 2028. Schneider has reportedly committed €2 billion to expand capacity in 2024–2027 to meet this surge. Siemens Energy recently said that much of its gas turbine order backlog comes from data center customers who reportedly have an “enormous” demand for electricity to feed AI infrastructure. Sharpen your strategy with mentorship + daily ideas - 30 days free access to our trading program
