Energy research firm Wood MacKenzie found, via an examination of major consumers of electricity, that the costs paid by the largest power users might not cover the gear needed to support data centers — that is, transmission lines and other features vital to a working and healthy grid.
That means other users of electricity, including residential customers, could be on the hook unless significant changes are made. In short, increased demand for electricity by data center operators threatens to boost utility bills for all customers.
“Only by removing data-center-caused infrastructure from utilities' books, such as by allowing large loads to contract with third parties for generation via clean transition tariffs, are both ratepayers and utility shareholders fully protected,” said Ben Hertz-Shargel, the firm’s global head of Grid Edge, in a statement via a LinkedIn post promoting the research.
As artificial intelligence finds its way into more aspects of daily and professional life, the potential problems with data centers — the backbone of not only AI but cloud computing and cryptocurrency mining — are coming into focus.
As one public official from Utah — a state trying to land more data centers — recently told Government Technology, the growth of AI “is throttled somewhat because of the lack of servers.”
Solving that problem requires more energy.
A task done via generative AI, for instance, can require 33 times more energy than needed by other software. By 2030, in fact, U.S.-based AI could consume more electricity than all the refrigerators in the country, according to Leila Doty, privacy and AI analyst for San Jose, Calif., at a recent AI conference.
According to a blog post earlier this month from Wood MacKenzie, power demand in the U.S. will increase by 2 percent to 3 percent per year through 2030, after having stayed “relatively flat” for 20 years.
Other estimates anticipate that demand will jump by 15 percent in some areas of the country.
“With the rapid commercialization of generative artificial intelligence, this demand will be turbocharged over the next decade,” according to that post. “However, while big tech firms are used to a ‘move fast and break things’ ethos, the power sector works in timeframes of five to 10 years, making access to electricity a major obstacle to growth.”
Not only that, but other sources of electricity demand, including transport, electric vehicles, heating and cooling and even “green hydrogen” — produced through electrolysis — will compete for available energy with those data centers, the blog notes.
In a way, the growth of AI and other forms of technology has sparked a race for power that has Microsoft eyeing the reopening of an infamous nuclear power plant and Amazon seeking what amounts to first dibs on power from another such source.
Wood MacKenzie says that investments this year in data centers could be double what they were in 2023.
“Overall, there seems little doubt that data centers will drive a large proportion of electricity demand growth through to the end of the decade,” the company said in its blog post.
Making residential consumers pay for that growth promises to increase the political tensions that already surround data center projects.
Public opposition to data centers takes on many forms, though it is unclear if the potential price of electricity has yet gained traction among opponents. The recent rejection of a data center project in Valparaiso, Ind., suggests that environmental concerns are among the top worries in some communities.
"If this project goes through — and I hope it does not — we will have sold a part of ourselves that we can never get back," Valparaiso resident Jerry Scott told the City Council. "We're talking about an environmental eyesore that will use huge amounts of water, huge amounts of fossil fuels and just employing a very few amount of people."
