As executives from tech giants like Amazon and Microsoft mingled in the hallways with utility companies and other electricity providers, an unavoidable question emerged: AI's huge demand for electricity. This not only caused anxiety in the industry, but also inspired new excitement.
Bill Wass, vice president of engineering for Amazon Web Services, revealed that a new data center is added every three days around the world, and Microsoft co-founder Bill Gates bluntly said that the power AI will consume is "astonishing." As data centers grow exponentially, the energy requirements to power them become a huge unknown.
Former U.S. Energy Secretary Ernest Moniz noted that the sheer scale of new and proposed data centers has left utility companies confused about how to provide enough power. Especially as wind and solar farms become increasingly challenging to build, they may have to rely more heavily on natural gas, coal and nuclear power plants.
The complexity is that companies not only want to increase their power sources, but they also want those power sources to be clean. Many technology companies and utilities have pledged to significantly reduce carbon emissions, but growing demand is complicating that goal.
For example, data center construction in northern Virginia has caused a sharp increase in electricity demand in the region. Utility company Dominion Energy has set a goal of eliminating or offsetting its carbon emissions by 2050, but expects to build at least one gas-fired power plant to meet demand.
At the same time, utilities, which have experienced a prolonged period of stagnant electricity demand, are significantly raising their forecasts. Five-year forecasts for U.S. electricity demand growth have doubled, according to a report by consulting firm Grid Strategies.
The surge in AI-driven electricity demand is, along with other factors, creating new pressures on the grid. In the United States, new tax policies under the Inflation Reduction Act are driving a wave of manufacturing plant construction, and many states are working to use more electricity for transportation, heating and heavy industry. However, new data centers may be built faster than new electricity production, leading to already tight supply conditions.
The Biden administration has set a goal of eliminating carbon emissions from the U.S. power sector by 2035, but booming demand for AI is creating new challenges in achieving that goal. Still, the federal government says it's possible and is accelerating development of clean resources.
At the conference, however, tech companies and utilities were still debating whether more fossil fuels would be needed to meet demand. Toby Rice, chief executive of gas giant EQT, said technology companies were asking if they could buy gas from EQT because they needed a reliable supply of electricity that renewable energy could not always provide due to vagaries of weather.
In addition, the expansion of data centers around the world is also a trend. Southern Company, a utility that serves Georgia, Mississippi and Alabama, made a major revision to its power demand forecast in Georgia last year, driven largely by the expansion of data centers and other industrial activity. The company now expects winter electricity demand to grow by 6,600 megawatts by 2030, 17 times its previous forecast.
All resources must be considered in the face of this unprecedented increase in demand. About one-third of the world's 8,000 data centers are located in the United States, but data center expansion is a global phenomenon. Electricity consumption for data centers, artificial intelligence and cryptocurrencies could double by 2026, which represents a huge challenge and a huge opportunity for the global energy industry.
