Surging data-center power-demand risks subtracting clean energy from the grid

In November 2022, the launch of ChatGPT marked a milestone in artificial intelligence, further straining an already stressed electricity grid. The growing demand for digital services, electric vehicles and clean energy, now coupled with AI, poses significant energy challenges. As we enter a technological revolution, it is critical to address these challenges head-on.

AI’s potential is seemingly unlimited, and a robust grid is essential for American competition and tech innovation. AI has already transformed various fields, from education to autonomous vehicles. However, the energy required to power the data centers supporting AI and cloud services is limited.

In 2022, the overall consumption of data centers across the United States was 17 GW. By 2030, that number is expected to climb to 35 GW annually. With power markets already struggling, this increase will challenge the grid’s reliability and affordability. Companies like Microsoft, Google and Amazon are investing heavily in energy, particularly carbon-free sources, to support their growth. This competition for clean power could limit consumer access and drive up the price of energy.

In early March, Talen Energy sold its 960-MW data center campus, Cumulus Data Assets, to Amazon Web Services in a $650 million, 10-year power purchase agreement. The center, linked to the Susquehanna Nuclear Station in Northeast Pennsylvania, will supply fixed-price nuclear energy to Amazon. This deal also removes capacity from PJM, redirecting it solely to Amazon’s data center.

AWS’s power commitment increases by 120-MW increments over several years, with a cap at 480 MW and options for two ten-year extensions. This acquisition allows tech giants to shift significant consumption to carbon-free energy, helping them meet net-zero carbon goals. However, if utilities can’t keep up, companies may need to reassess their carbon goals or build significant behind-the-meter generation.

Recently, Google announced it would end its commitment to operational carbon neutrality, moving to a net-zero goal by 2030. This shift allows Google to expand without being constrained by carbon impacts, placing a financial burden on their growing power consumption and relying on market pressures to drive clean energy.

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