Saturday, March 9, 2024

"Amid explosive demand, America is running out of power"

From the Washington Post via MSN, March 7: 

Vast swaths of the United States are at risk of running short of power as electricity-hungry data centers and clean-technology factories proliferate around the country, leaving utilities and regulators grasping for credible plans to expand the nation’s creaking power grid. 

In Georgia, demand for industrial power is surging to record highs, with the projection of new electricity use for the next decade now 17 times what it was only recently. Arizona Public Service, the largest utility in that state, is also struggling to keep up, projecting it will be out of transmission capacity before the end of the decade absent major upgrades.

Northern Virginia needs the equivalent of several large nuclear power plants to serve all the new data centers planned and under construction. Texas, where electricity shortages are already routine on hot summer days, faces the same dilemma.

The soaring demand is touching off a scramble to try to squeeze more juice out of an aging power grid while pushing commercial customers to go to extraordinary lengths to lock down energy sources, such as building their own power plants.

“When you look at the numbers, it is staggering,” said Jason Shaw, chairman of the Georgia Public Service Commission, which regulates electricity. “It makes you scratch your head and wonder how we ended up in this situation. How were the projections that far off? This has created a challenge like we have never seen before.”

A major factor behind the skyrocketing demand is the rapid innovation in artificial intelligence, which is driving the construction of large warehouses of computing infrastructure that require exponentially more power than traditional data centers. AI is also part of a huge scale-up of cloud computing. Tech firms like Amazon, Apple, Google, Meta and Microsoft are scouring the nation for sites for new data centers, and many lesser-known firms are also on the hunt.

The proliferation of crypto-mining, in which currencies like bitcoin are transacted and minted, is also driving data center growth. It is all putting new pressures on an overtaxed grid — the network of transmission lines and power stations that move electricity around the country. Bottlenecks are mounting, leaving both new generators of energy, particularly clean energy, and large consumers facing growing wait times for hookups.

The situation is sparking battles across the nation over who will pay for new power supplies, with regulators worrying that residential ratepayers could be stuck with the bill for costly upgrades. It also threatens to stifle the transition to cleaner energy, as utility executives lobby to delay the retirement of fossil fuel plants and bring more online. The power crunch imperils their ability to supply the energy that will be needed to charge the millions of electric cars and household appliances required to meet state and federal climate goals.  

The nation’s 2,700 data centers sapped more than 4 percent of the country’s total electricity in 2022, according to the International Energy Agency. Its projections show that by 2026, they will consume 6 percent. Industry forecasts show the centers eating up a larger share of U.S. electricity in the years that follow, as demand from residential and smaller commercial facilities stays relatively flat thanks to steadily increasing efficiencies in appliances and heating and cooling systems.

Data center operators are clamoring to hook up to regional electricity grids at the same time the Biden administration’s industrial policy is luring companies to build factories in the United States at a pace not seen in decades. That includes manufacturers of “clean tech,” such as solar panels and electric car batteries, which are being enticed by lucrative federal incentives. Companies announced plans to build or expand more than 155 factories in this country during the first half of the Biden administration, according to the Electric Power Research Institute, a research and development organization. Not since the early 1990s has factory-building accounted for such a large share of U.S. construction spending, according to the group.

Utility projections for the amount of power they will need over the next five years have nearly doubled and are expected to grow, according to a review of regulatory filings by the research firm Grid Strategies.

Chasing power
In the past, companies tried to site their data centers in areas with major internet infrastructure, a large pool of tech talent, and attractive government incentives. But these locations are getting tapped out.

Communities that had little connection to the computing industry now find themselves in the middle of a land rush, with data center developers flooding their markets with requests for grid hookups. Officials in Columbus, Ohio; Altoona, Iowa; and Fort Wayne, Ind. are being aggressively courted by data center developers. But power supply in some of these second-choice markets is already running low, pushing developers ever farther out, in some cases into cornfields, according to JLL, a commercial real estate firm that serves the tech industry.

Grid Strategies warns in its report that “there are real risks some regions may miss out on economic development opportunities because the grid can’t keep up.”

“Across the board, we are seeing power companies say, ‘We don’t know if we can handle this; we have to audit our system; we’ve never dealt with this kind of influx before,’” said Andy Cvengros, managing director of data center markets at JLL. “Everyone is now chasing power. They are willing to look everywhere for it.”

“We saw a quadrupling of land values in some parts of Columbus, and a tripling in areas of Chicago,” he said. “It’s not about the land. It is about access to power.” Some developers, he said, have had to sell the property they bought at inflated prices at a loss, after utilities became overwhelmed by the rush for grid hookups....


Amazon Just Bought A Nuclear Powered Data Center
The story goes on to discuss small modular reactors in relation to data centers, something we've also looked at.
Bill Gates and Microsoft's Azure cloud, Jeff Bezos and Amazon's cloud and Google's cloud have all been putting money into SMR research for their own purposes. From The Register, December 30, 2022: 
Surviving in Your Doomsday Bunker with Portable Nuclear Power to Spare


And more generally:

"There’s a Shortage of Electrical Wires, Transformers. That’s Good for These Stocks.

As well as the whole infrastructure series:

The Infrastructure Theme Is For Real (PWR)