“The fact that these facilities are city-sized is a huge deal,” Wilson said. “That has huge implications if these facilities get canceled, or they get built and don’t have long service lives.”
The rising costs of the data center boom
Utilities are using their sky-high forecasts to justify massive investments in power plants and grid infrastructure around the United States.
Those forecasts, in turn, have already driven up utility bills in some regions, including those for many of the more than 67 million people served by PJM Interconnection, the country’s biggest energy market. For PJM, future data center forecasts have driven capacity costs — the prices paid to power plants and other grid resources to meet peak grid demand — from $2.2 billion in 2023 to $14.7 billion in 2024 and to $16.1 billion in this summer’s capacity auction.
PJM customers in heavily impacted states like New Jersey are taking notice. Popular anger at rising bills helped propel Democratic gubernatorial candidates who pledged to combat increasing power costs to outsize wins in New Jersey and Virginia elections earlier this month.
Many utilities aim to meet this surging demand by building new fossil-gas-fired power plants, which could not only increase costs for customers but also slow down the transition to clean energy. Across much of the Southeast and the Midwest, in particular, utilities aim to build gigawatts’ worth of these power plants, which emit carbon dioxide as well as toxic air pollution.
In Virginia, home of the world’s largest data center hub, Dominion Energy is proposing gigawatts of new gas-fired power that, critics warn, could make it impossible for the utility to meet a state-mandated phaseout of fossil fuel use by 2045. The utility argues that the plants are needed to maintain reliability in the face of data center growth.
Meanwhile, in Georgia, major utility Georgia Power is seeking regulator permission to build gigawatts of gas-fired power capacity to meet load forecasts swollen by proposed data centers. Opponents fear that the plants will balloon already fast-rising utility bills, and this month voters overwhelmingly elected to the state’s Public Service Commission two Democratic challengers who ran on a platform of constraining unchecked utility spending.
Elsewhere, state lawmakers, regulators, and data center developers are seeking ways to accommodate growth without overwhelming the grid and utility customers.
The Grid Strategies report also highlights that U.S. utilities and grid operators haven’t yet committed to expanding the transmission grid at the scale needed to support the growing electrification of vehicles, buildings, and industries — however the data center demand plays out. “Even conservative growth trajectories outpace recent years and would require substantial grid expansion to accommodate,” it notes.
Ultimately, Wilson suggested that utilities, lawmakers, and regulators will need to make sure the cost of meeting whatever demand does materialize is not shifted to everyday customers.
“We’ve got a gigantic amount of additional load over the next five years to manage from a supply-chain, planning, and construction standpoint,” he said. “These are questions that regulators and intervenors should be asking, and not just trusting the utilities, who say, ‘This is the way we’ve always done it.’”
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Great Job Jeff St. John & the Team @ Canary Media Source link for sharing this story.
