A new report released by the Southwest Energy Efficiency Project offers recommendations for utilities, states, and IT companies tied to the development of data centers.
New data centers, especially those designed to power artificial intelligence, are driving large increases in projected electricity demand in the Southwest states, as well as nationally and globally, SWEEP said on March 27.
“There are growing concerns about how utilities will meet these electricity needs. For example, how can utilities ensure that the costs of new generation and transmission infrastructure are not passed on to other customers, whether business or residential? And will utilities add new gas-fired generation to meet the growing power demands, potentially compromising state or utility clean energy goals?”
SWEEP interviewed most of the major utilities in the Southwest states to explore these questions. The findings are provided in the new SWEEP report, Data centers: Power needs and clean energy challenges.
“We found that Southwest utilities are seeing significant requests from Information Technology (IT) companies for large amounts of new power, amounting to thousands of megawatts (MW) of potential new capacity for most of the utilities interviewed.”
SWEEP identified a few effective practices that help manage these challenges. For example, several Southwest utilities are developing interconnection contracts or tariff designs to ensure that data centers pay for their own generation and transmission capacity needs.
However, there is still a need for further action in several areas, SWEEP said.
Currently, only one utility in the Southwest — NV Energy — offers a new tariff that allows data center customers to purchase enough renewable energy to power their facilities. This tariff was proposed by Google to enable it to purchase 100% renewable energy for its planned facility in northern Nevada.
The proposal was supported by NV Energy and has now been approved by the Nevada Public Utility Commission.
Based on interviews and additional research, SWEEP’s data center report includes several recommendations for utilities, states, and IT companies.
“First, we recommend that utilities introduce new tariffs requiring large data centers with power demands exceeding 50 MW to source all of their electricity from new renewable energy. Second, we recommend that utilities ensure IT companies cover the full cost of the generation and transmission infrastructure needed to support them. Utilities and policymakers may also consider applying these requirements to all new customers with power demands above 50 MW. Additionally, we recommend that utilities implement energy efficiency and demand response programs for new data centers to help mitigate their impact on the grid and the environment.”
SWEEP said these recommendations address “two major concerns: (a) threats to state or utility clean energy and climate goals due to increasing electricity demand from large data centers, and (b) rising electricity rates for households and other businesses caused by the costs of new power infrastructure for hyperscale data centers being passed on to other customers.”
