Artificial intelligence and data centers threaten to overwhelm the power grid, former regulators warn

For months, researchers and experts have been sounding the alarm about the number of energy data centers focused on using artificial intelligence to quickly store and process data. These facilities house tens of thousands of computer servers that consume enormous amounts of energy.

While small facilities may only use 1 to 5 megawatts of power, large data centers use more than 100 megawatts. One megawatt is considered to be approximately the same amount of energy used by 400 to 900 homes in a year.

Unprepared mesh

As tech giants like Microsoft, NVIDIA, and Meta look to lead the AI ​​revolution, the growth of these data centers is only expected to increase, and with it, the demand for power. Research has estimated that by 2030, data centers could consume more than 9% of grid-generated electricity, more than twice what they consume today.

Industry experts said the network would not be able to handle such growth.

“Oh God, no,” said Tony Clark, who served on the Federal Energy Regulatory Commission from 2012 to 2016. Washington Examiner. “What I mean is there is so much load coming online so quickly that it would be very, very difficult to handle it in the short term.”

Marc Spitzer, who worked at FERC from 2006 to 2011 after being appointed by former President George W. Bush, agreed, saying, “Not in its current state. But if we plan now, I think we can move forward.”

The AI ​​burden is expected to hit consumers sooner or later as grid operators increase utility rates at a dramatic pace. Earlier this year, PG&E customers saw their rates increase by 17%, while PJM Interconnection, the largest regional transmission organization that monitors the multi-state grid in the United States, is increasing its costs from $28.92 per megawatt-day to $269.92 per megawatt-day starting next year . This is an increase of over 800% and is expected to impact consumers’ energy bills.

In announcing the rate increase in July, PJM said the increase would come because grid reliability is at risk as energy sources such as coal decline and energy demand grows at a faster rate than renewable energy sources.

As demand exceeds supply combined with the effects of extreme weather, grid monitoring company North American Electric Reliability Corporation has warned that rolling power outages pose a risk to consumers across the country.

Some industry insiders and lawmakers have blamed FERC and the Biden administration’s clean energy policies for shaky stability.

“Unfortunately, this is all about this administration and how they handle it,” Rep. Troy Balderson (R-OH) said recently. Washington Examiner. “I think when they first came into office there was a great opportunity to address this, to start dealing with it.”

Meanwhile, former committee members said securing the network would require several approaches.

Increasing reliability

For starters, Clark, who was nominated to the commission by former President Barack Obama, said it would include better coordination with state governments as well as what he calls “price formation.”

Prices set by market regulations implemented over decades are not sufficient to keep the grid functioning, Clark said, given that the resources available in wholesale electricity markets have changed dramatically.

“This means that FERC must ensure that the way prices are set in the markets continues to support reliability and the maintenance of units that are still needed to ensure reliability,” Clark said.

Similarly, former Kentucky Public Utilities Commission chairman Kent Chandler called for fair pricing, which means customers can see prices that reflect production and delivery costs, as well as their share of the network they use.

“If a utility has to build a plant to handle such a large old load, which is about the size of a plant, how do we ensure that the new customer pays their fair share? Because before, if this new customer hadn’t come along, this plant wouldn’t have been built,” Chandler said Washington Examiner.

Chandler said that without this analysis, “it doesn’t seem to make sense” to force customers to pay for half of the plant they didn’t ask for.

Neil Chatterjee, who served on FERC from 2017 to 2021 after being appointed by former President Donald Trump, said Washington Examiner that trust in the network is based on transmission. He said more transmission is needed to increase network capacity and meet greater demand.

The power to support the network

Amid declining use of traditional energy sources, Republicans have begun to warn about the Biden administration’s push for renewable energy sources such as solar panels and wind turbines, saying it will not be able to keep up with demand.

The Republican Party has criticized the administration for attacking natural gas production while supporting solar and wind technologies.

But Clark, an Obama appointee, said gas would be key to stabilizing the grid.

“It will be a combination of available resources, but realistically, a very, very important part of this process will be gas,” he said Washington Examiner. “When you look at the scale of the load delivered to the Internet, it is inconceivable that so much renewable energy and so much transmission could be built in a short period of time.”

“I mean, it takes a decade to plan, permit (and) implement a major transmission project in this country,” he said. “So you’re left with whatever is profitable, and natural gas is profitable.”

Chatterjee said that regardless of which administration enters the White House in January, both sides will have concessions on energy use for the grid.

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He explained that Democrats will need to recognize the value of natural gas, and in some regions, coal, to ensure energy is reliable and affordable. Meanwhile, Republicans will be forced to turn to more “flexible” resources such as wind and solar energy.

“Ultimately, this is an engineering solution, not a political one, but there will be trade-offs,” Chatterjee said.