Per WSJ, hyperscale data centers (much larger than previous generations of data centers) are upending utility plans to cut use of fossil fuels. These facilities will provide computing power to meet the needs of artificial intelligence, but have also created a four-way battle: (1) electric utilities trying to keep the lights on (2) tech companies committed to net zero emissions (3) consumers upset about rising electricity prices and (4) regulators overseeing grid investments trying to keep it green.
The center of this fight is northern Virginia, known as “data center alley”, with ~70% of global internet traffic going through this area. Amazon Web Services invested $52 B in VA from 2011-2021 and plans to invest another $35 B by 2040. Loudoun County, VA has 37 million square feet of data center space now, with another 42 million square feet proposed.
For many utilities, the solution to rising demand is to add natural gas plants and keep coal plants operating longer to balance expansion of renewables. Dominion Energy, which supplies power to northern Virginia, expects data center power usage to quadruple over the next 15 years and represent 40% of their demand in the state. They are adding solar, wind and battery storage capabilities, but are also looking at more natural gas plants. Utilities in GA and NC are adding fossil fuel power or potentially delaying shutdowns of coal-fired plants to meet demand. As a result, retirements of coal-fired power plants are expected to slow from 10 GW/year in the past decade to 6 GW/year through 2030 per S&P Global Insights.
Big tech companies, such as Alphabet, Microsoft and Amazon, are among the biggest users of data centers. They have also committed to net zero emissions in coming decades. Some are pushing back against the use of fossil fuels, such as adding gas plants or delaying coal plant retirements, but utilities are advocating for a balanced portfolio of renewable/non-renewable resources to maintain reliability and keep the lights on.
Consumers are also fighting against the data centers and potential fossil fuel plants to meet their needs. Neighbors complain about constant buzzing from data centers and the power lines that serve them. Community groups don’t want to pay for power plant and other grid investments, and associated rate increases, necessary to supply new power for the data centers. And local residents complain about the health and environmental risks associated with these investments.
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