Data Centers: The Big Buildup of the Digital Age
Server farms are colonizing the West's power grids and upending the energy transition
🤖 Data Center Watch 👾
What I’m about to write is strange, even a little surreal, even to me. It seems over the top, hyperbolic, and alarmist, all things I try to avoid in my writing (unless I’m going for satire). But here it is: The Big Data Center Buildup is transforming the West (and other regions) as quickly and radically as the post-war Big Buildup of coal plants and other power infrastructure in the 1950s, ‘60s, and ‘70s.
See what I mean by hyperbolic? After all, data centers are just big box stores filled with walls of computer, processors, servers, and other equipment rather than cheap plastic items. How transformative could they really be?
Very, it turns out. As I’ve written here before, data centers use huge amounts of energy and water, and if they keep sprouting like weeds in business parks and rural areas, then they very well could not only hamper, but reverse the transition away from fossil fuels.
Tech bros will certainly say I’m being hysterical, and point to the latest estimates showing that each AI query uses a tiny fraction of the energy and water that a person consumes by doing other cyberspace activities or, for that matter, simply existing in modern times. Google, for example, says a “median” Gemini text query uses .24 watt-hours of electricity, which is about the same as watching 9 seconds of television, or microwaving for 1 second, or running a refrigerator for six seconds. And growing the beef for a single hamburger uses hundreds of times more water than hundreds of AI queries.
As far as I can tell, these figures are accurate. But what do they really tell us? I suppose we can feel a bit less guilty about succumbing to the temptation to use that iPhone AI thingy to identify something we photograph, or for asking ChatGPT to pen a song. It has no bearing, however, on what’s playing out on the ground, which is a sort of colonization of the power grid by larger and larger server farms.
I closely follow energy-related news as part of my job, and hardly a day goes by when I don’t encounter a story about the growing electricity demand from new data centers and utilities scrambling to keep up. Less than a decade ago, most Western utilities were expecting power consumption to plateau or even begin decreasing by now.
In 2018, for example, California utility regulators approved a plan to shutter Diablo Canyon’s two nuclear reactors in 2024 and 2025. Doing so would deprive the state’s grid of enough juice to power some 1.7 million homes. But Pacific Gas & Electric, the plant’s operator, figured it wouldn’t be a problem, since demand was expected to decline over time due to efficiency gains and more rooftop solar, and they could cover the rest with new renewables.
Instead, demand has increased substantially on PG&E’s grid since then, in large part due to new data centers in Silicon Valley, and it’s likely to continue to balloon over the next couple of decades. This forecast-blowing turnaround has prompted PG&E to toss out its old resource plans, work on acquiring more energy generation, and delay Diablo Canyon’s retirement for at least another five years. The pattern is being repeated all over the West with alarming regularity. It seems as if no place is safe from the invasion.
Some recent examples:
In late July, PG&E said it expects 10 gigawatts of new data center capacity to connect to its grid over the next ten years. Ten gigawatts, or 10,000 megawatts, is about one-fourth of the total demand on the California grid on a hot summer’s day, or equivalent to about five Diablo Canyons. It’s a crapload of power, in other words, and there’s no way they’re going to serve that kind of demand growth with just solar and wind, especially since a certain administration is doing all it can to stop all solar and wind from being built. It’s also notable because it’s a 20% increase in projected data center capacity since May.
NorthWestern Energy signed on to provide up to 1,000 MW of power — or nearly all of the utility’s generating capacity — to Quantica Infrastructure’s AI data center under development in Montana’s Yellowstone County. This would require the utility to either construct or purchase additional power, which could lead to higher rates for their existing customers. Now NorthWestern is proposing to merge with Black Hills Corp., another electricity and gas utility, saying the combined utility would be better positioned to meet rising power demand from, you guessed it, new data centers.
Xcel Energy expects to spend about $22 billion in the next 15 years to meet new data centers’ projected power demand in Colorado, potentially doubling or even tripling legacy customers’ rates. Also of concern: If the projections are overblown, Xcel could end up building a bunch of new generation that’s not needed, leaving the utility and its customers with a bunch of stranded assets.
Wyoming officials have worked to lure data centers and cryptocurrency firms to the state, and it seems to be working. Earlier this month energy firm Tallgrass proposed building an 1,800 MW data center, along with dedicated gas-fired and renewable power facilities, near Cheyenne. That adds to Meta’s facility in Cheyenne and the 1,200 MW natural gas-powered Prometheus Hyperscale data center under development in Evanston. Observers say electricity demand from these centers could transform the physical and regulatory utility landscape and potentially drive up costs for “legacy” customers.
New Mexico utilities are struggling to meet growing demand from an increasing number of data centers, while also complying with the state’s Energy Transition Act’s requirements for cutting greenhouse gas emissions.
Numerous companies are eyeing Delta, Utah, as a site for new data centers. This is in part because land is cheap there. But also because it is home to the Intermountain Power Project, a massive coal plant built during the Big Buildup. The plant is scheduled to be converted to run off natural gas and, ultimately, hydrogen, but Utah lawmakers want at least one of its units to continue to burn coal. They just need a buyer for the dirty power: Enter data centers. Fibernet MercuryDelta is looking to construct the 20-million-square-foot Delta Gigasite there; and Creekstone Energy plans to manage 10 gigawatts of capacity there, with power coming from coal, solar, and natural gas.
And Arizona’s largest utilities say demand from planned new data centers could increase total power load by 300% over current levels. Recently, Arizona Public Service announced it would keep burning coal at Four Corners Power Plant beyond its scheduled 2031 retirement to help meet this growing demand.
Sometimes the tech firms will purchase renewable power or build their own solar, wind, or geothermal facilities. But in most cases, they rely partly or wholly on fossil fuel generation, whether it’s from the grid — which is still largely dominated by natural gas and coal in many places — or from dedicated generators. While a lot of solar is still being added to the grid, it isn’t enough to keep up with rapidly growing demand. Plus, it may not last. The GOP phased out federal tax credits for wind and solar. And the Trump administration killed the Solar for All program that funded rooftop solar for lower-income households, and crippled the REAP program, which helps farmers install solar panels. Interior Secretary Doug Burgum has vowed to make it as difficult as possible to develop solar and wind on federal lands.
What that means is that we’re likely to see another Big Buildup for the cyber age. It will include single new data centers that span nearly 500 acres and consume more power than all of the homes of Montana and Wyoming combined. And it will include the generating facilities to run the servers and to keep them cool. In the absence of policies limiting fossil fuel burning and preventing cost shifts to existing customers, we’re all going to pay the price.
📸 Parting Shot 🎞️
