AI Boom Could Slow U.S. Clean Grid Ambitions

Yves here. We’ve commented from time to time about the lame-brained way energy transition and Green New Deal advocates, along with sympathizers in the media and political classes, act if consumers and businesses can be bribed or forced to buy products that are “greener,” however defined, it will go a long way to limiting climate change damage. Perilous little thought is given to total power consumption, and that that need to be contained or reduced for real progress to occur (as we call it, “radical conservation”).

One of the examples of how hopium-tinged fantasies about a no-pain shift to greener outcomes make matters worse comes below. If anyone were serious about protecting the climate, there would be serious taxes on data center use and growth, with serious thought as to how to limit energy-hogging, dubious value uses like AI. Does it make sense to destroy the planet so teenagers can have ChapGPT do their research?

Similarly, experts have been pointing out that the US (and I assume quite a few other advanced economies) lacks the grid capacity to handle the planned conversion away from gas-fueled cars to EVs. AI is going to make that capacity problem worst. So we can expect to see rationing by price, which will discourage conversion to EVs because operating costs will rise, or rationing by limiting consumption, as in use caps or unplanned consumption curbs, as in outages.

By Tsvetana Parakskova, a writer for with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. Originally published at OilPrice

  • AI data centers have become a significant burden for utilities.
  • Some utilities in the eastern and southern parts of the U.S. are proposing build-outs of new natural gas-fired capacity alongside renewables to support the growth in electricity consumption coming from data centers.
  • Many tech companies want clean energy to power their new data centers, but utilities are struggling to keep up with this demand.

Data centers, especially those powering AI technologies, have seen such explosive growth that they are taxing utilities beyond what soaring power demand is calling for.

Some utilities in the eastern and southern parts of the U.S. are proposing build-outs of new natural gas-fired capacity alongside renewables to support the growth in electricity consumption coming from data centers. Others have planned to delay the timeline for retiring coal-fired capacity to ensure grid reliability.

Many tech companies want clean energy to power their new data centers, but utilities are struggling to keep up with this demand. These utilities cannot hook up new solar and wind power to the grid fast enough to allow a timely start to new data center operations.

There is concern that unless huge investments in transmission lines and grid upgrades are made soon, and every year, the U.S. economy of the future of data centers and EV and battery manufacturing growth would be forced to slow up.

“That’s the ultimate concern everybody has: that we’ll be short on power,” Rob Gramlich, founder of consulting firm Grid Strategies, told Bloomberg.

The U.S. needs at least $20 billion in investments annually in long-distance transmission lines, according to Gramlich, who noted that the current spending is basically zero.

Grid Strategies published a report last month in which it analyzed data from utilities’ regulatory findings. The analysis found that over the past year, grid planners nearly doubled the 5-year load growth forecast, the key drivers being investment in new manufacturing, industrial, and data center facilities.

“The U.S. electric grid is not prepared for significant load growth,” Grid Strategies said in the report, noting that a recent “surge in data center and industrial development caused sudden, shockingly large increases in 5-year load growth expectations.”

Dominion Energy – which serves Virginia’s Eastern Loudoun County, dubbed Data Center Alley and the world’s “largest data center market,” – has said that “The big drivers of current and future growth include: migration to the cloud as companies outsource information technology functions, smartphone technology and apps, 5G technology, digitization of data, and artificial intelligence.”

In its 2023 integrated resource plan (IRP), Dominion Energy Virginia detailed last year a range of possible resource additions by 2048, including up to 9 gigawatts (GW) of new natural gas-fired capacity due to reliability concerns.

Further west of Virginia, Kansas City-based utility Evergy said in June 2023 that it would retire coal operations at its Lawrence Energy Center only in 2028, compared to earlier plans for end-2023 retirement. At that time, one unit is expected to fully retire, while the remaining unit will remain available for operations with natural gas to meet customer needs during times of high electricity use.

“Our service area is experiencing some of its most robust electricity demand growth in decades, including very large projects like the Panasonic electric vehicle battery manufacturing factory and the Meta datacenter, as well as broad-based economic development in both Kansas and Missouri,” Evergy’s president and CEO David Campbell said.

NextEra Energy Resources president and CEO Rebecca Kujawa said just this week on the Q4 earnings call that “Clearly, there’s an enormous amount of demand being driven across the U.S. economy by the growth in data centers, driven by a lot of things, of course, but specifically generative AI.”

“And that growth is pretty explosive at this point.”

So explosive is the growth that Boston Consulting Group (BCG) says that data center electricity consumption accounted for 2.5% of the U.S. total (~130 TWh) in 2022 and is expected to triple to 7.5% (~390 TWh) by 2030.

“That’s the equivalent of the electricity used by about 40 million U.S. houses – almost a third of the total homes in the U.S.” said BCG.

Globally, electricity consumption from data centers, AI, and the cryptocurrency sector could double by 2026, the International Energy Agency (IEA) said in its Electricity 2024 report this week.

After consuming an estimated 460 terawatt-hours (TWh) globally in 2022, electricity consumption from data centers could reach more than 1,000 TWh in 2026—roughly the same as Japan’s total electricity consumption.

Depending on the pace of deployment and AI and crypto trends, the additional electricity consumption of data centers in 2026 compared to 2022 would be roughly equivalent to adding at least one Sweden or at most one Germany to demand, the IEA says.

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  1. Giordano Bruno

    Super important topic, thank you. My question is, why not dictate that new data centers have to simultaneously build solar farms with storage next to their data centers? Require that a permit to build includes providing the power to run the system. It seems that, at least in this one instance, requiring self-generation at the point of use would eliminate transmission issues. However, the overarching point of the article is spot on, new green capacity in the face of ever growing demand is not the answer.

    1. i just don't like the gravy

      Requiring datacenters build a solar farm next to their operations is wildly impractical. The amount of land you would need to purchase, let alone the cost of the panels etc, makes this prohibitive.

      Solar panels don’t generate nearly enough to support the needs of a datacenter, unless the datacenter is no bigger than a school bus.

      Which is why the ecomodernists live in a fantasy. All of the accoutrements of our industrial-information society require hydrocarbons. Doing it any other way is nearly impossible. This is why “degrowth” is the only short- and mid-term solution (which also won’t happen because people like their creature comforts).

        1. B2Climate.School

          Crypto should totally be banned. AI is a bit trickier. Unlike crypto there are actual use cases, including some promising climate ones, but given the grid capacity issues regulation of usage/taxation should be on the table, so enterprises can use it but teens don’t get to have NSFW chats with their favorite Harry Potter characters for a few bucks a month). I would go after the electric SUVs first if it were up to me but I haven’t looked at all the numbers in the excellent links in this article yet so I might have a more cogent idea after that.

          1. Barbara McKay

            AI is already useful and therefore “trickier,” but with several of its inventors warning of its potentially disastrous misuses, it’s probably wise to strangle it in its cradle. I know you like it, but look at how out-of-control the whole screen addiction thing has become – though most never imagined it when it was a shiny new thing – and let that be a warning.

      1. anaisanesse

        It seems the EU was in this matter, as well as economically, rather foolish to let the USA (!!) cut off its supply of cheap fuel needed for all aspects of energy use and available without war from Russia.

  2. Vicky Cookies

    It would seem to me that a rational way to approach this problem might be to begin by asking what it is we need (food, water, and shelter). No one needs the products of most industry; no one needs to collect massive amounts of data for the purposes of market research or spying or whatever. Of course, in our consumer society the concept has been intentionally and systematically conflated with wants, obscuring issues like this which require urgent attention.

    Michael Hudson will often remark that the scale of a country’s production can be measured by its energy use. With this in mind, and given our climate crisis, which we might call ‘the crisis of heavy industry’, the need (yes, need) for at least de-growth is clear

    1. Cassandra

      I feel that Mr. Hudson is out of date here and there is an inverse relationship instead. At this stage of death-by-financialization, capitalism’s use of energy is growing exponentially while actually producing less and less. If we were to stop shoveling electrons from one place to another for the sake of bitcoin and AI (not to mention military adventures to secure the mineral resources for the above), we might possibly have a chance to avoid ecological collapse.

      1. podcastkid

        I think you both are right. Everyone who likes Hudson I believe thinks we should grow enough to where there’s one chicken in every pot [or enough rice, beans, hospitalization, time off, and pay]. For a moment that would generate trust that enough citizens will have kooled out such that they can come up with decent ideas for an alternative economy.

        Sooner or later we’ll have to focus on a lower energy specialization. For a moment also we’ll have to export…just like for a moment there’ll have to be enough chickens. I don’t see shifting into 5th right away; it would have to be more like a dialectic. Anyway, suppose [just suppose] someone suggested smelting aluminum for something to export. Nix that one! Getting the juice would not be a timely endeavor. as per the point of the above article. I don’t know what, maybe organic ginseng. Maybe a non-addictive pain killer. I submit: the other energy slaking endeavors are all spoken for. After an exporting chapter, then what? People are broke down, so advancing a low wattage medical specialization would keep just as much interest going, plus help the people [are Cubans strung out on AI?]. Instead of hurt them like financialization.

        1. p fitsimons

          In my home town one of the big recent users of electricity is the indoor manufacture (growth) of marijuana.

    2. Paul Simmons

      I agree with you about our perceived needs. Our perspective changed with the advent of agriculture. Our ship is now at sea, course unknown, but we can never go back.

      1. steppenwolf fetchit

        The Indian Nations did agriculture, and didn’t flush themselves down the toilet of evergrowing wants.
        So by their example, they showed it can be done.

        So how might we of the non-Indian majority ” go Indian” in our approach to agriculture and the things and stuff produced thereby?

  3. John Steinbach

    Here in Prince William County, just south of Loudoun, the Board of Supervisors has just approved the world’s largest data center complex covering 2,000 acres of farmland, and immediately adjacent to the Manassas Battlefield Park & Conway Robinson State Forest. The 34 datacenters will require about 3GW of electricity, enough to power 750,000 homes. Earth data center will have 16 locomotive-sized emergency diesel generators. There are about 70 other data centers operating, approved or planned for the county.

    Dominion wants to build scores of small modular nuclear reactors in addition to the gas turbine generators. Transmission lines are planned to bring power from West Virginia, SW Virginia, and down from Northern Virigina. Dominion is warning of rolling blackouts.

  4. Jack

    Recently, I posed a question to a very smart 35 year old environmentally conscious person: “Are you using clean energy to power your computer and charge your EV?” Answer was a “yes”. They live in a State whose energy is supplied by fossil fuel . They could not understand how the energy was dirty .
    Governments have imposed dates by which car manufacturers must meet EV targets but same governments could not tell those manufacturers to sell vehicles such as Honda Fit, Toyota Yaris , etc . Instead , same car companies are now making vehicles so big that they look like something out of a mobster movie .
    AI? Yes, how about 25 times the energy use of vehicles by the time it’s fully operational (Google , Microsoft etc are all into it .)
    China has already made a proposal to car manufacturers to make all their EV’s and their batteries (washing machine /smartphone model ) . They would simply place their stamps on it with minor alterations . Some are taking it .
    What am I trying to say ? We are looking at all this with old eyes , moral eyes perhaps ?
    There are very intelligent solutions to the energy crisis but as soon as they are mentioned you will get a thousand negatives including those from the oil patch .

    1. KLG

      Several years ago I taught a medical student who proudly drove a Tesla with a license plate labeled “Emission-Free Vehicle.” I asked him where he plugged it in. “At my house,” he replied. I then reminded him that it wasn’t an emission-free vehicle because our power comes from a gargantuan coal-fired plant (frequent coal trains from Montana IIRC) 25 miles up the road, previously also the largest emitter of mercury in the United States, and that’s where his car’s emissions occur. He was quite unhappy with me for a long time after that. Another budding member of the PMC disappointed in his virtue. Oh, well.

    2. B2Climate.School

      Yeah the giant electric SUVs and all SUVs should be taxed out of existence. “You’re very free to buy these things but the tax rates 10,000%” kind of thing. Even the Financial Times ran an op-ed advocating basically this a while ago. But green capitalist governments are afraid of the populist backlash, and for good reason (spoiled but insecure smallholder classes can be easily activated into rebellion by fossil capital and the right).

      1. steppenwolf fetchit

        A very simplistic cultural-political map posits the existence of a Clinton Archipelago . . . and a TrumpLand “Ocean” between all the islands of the Clinton Archipelago. Here are the conceptual maps.

        Since radical conservation has to start somewhere, maybe it can be started within the Clinton Archipelago itself. If thought of in those terms, is there a way that the ” Blue Cities and Towns” can turn themselves into viable lily pads of radical conservation? In fact as well as in word and posture?

  5. ISL

    The article should have also mentioned the storage problem. Data centers are 24/7, while solar and wind are not. So, setting up a solar farm near a data center requires gas power to run at night, when it rains, when it is cloudy, etc. Although solar helps, it still means fossil fuel usage increases, not decreases, i.e., the atmospheric CO2 continues to increase (and CH4 that leaks).

    It’s hard to envision a future that doesn’t include AI and more data centers, so unless they are in orbit – one more reason to expect global warming to be solved naturally (by nature) and not to human advantage.

    1. CA

      There are several profound solutions to the solar and wind “storage problems,” so too solutions to transmission problems:

      September 11, 2023

      Power of Dunhuang: Gardening steel ‘sunflowers’ in the Gobi Desert

      Every time Liu Fuguo takes people on a tour of his company’s power station in the Gobi Desert, he hears a lot of “wows”.

      “Their reaction is the same as when I first came here,” said Liu, who works as the general manager of Dunhuang Shouhang Resources Saving New Energy, an enterprise engaged in the technology of concentrating solar power and energy conservation.

      When he arrived as a tourist in 2018, Liu was also amazed by the science-fiction world in front of him. Having worked in the thermal power industry for 30 years, Liu chose to work in this solar thermal power station in Dunhuang, northwest China’s Gansu Province, that same year.

      Looking from the top of a 10-story building in the power station, visitors can see tens of thousands of beams of sunlight converging from the computer-controlled mirrors, known as heliostats, toward the 260-meter-high tower in the center. Around the tower, nearly 12,000 heliostats are arranged in concentric circles, tracing the sun like sunflowers.

    2. clarky90

      University of Wollongong paleoclimatologist Helen McGregor said CO2 levels were about 2000 ppm during the Jurassic Period, and average temperatures were about five degrees warmer than today. There were no ice caps at the North or South poles. Life was abundant and diverse.

      Present Atmospheric CO2, December 2023, The Holocene Period

      421.86 parts per million (ppm) (about 1/5 of Jurassic levels)

      Presently, life seems to be struggling and diversity is diminishing….

      Perhaps we could urgently stop poisoning everything with Wunderwaffe chemicals? (for instance…… gigantic bombs), and cease fixating on CO2 levels?

      We clearly have a problem,…… but mis-identifying “the problem” just compounds the error. …..Like a diagnosis of constant stomach pain as “anxiety”, when in fact it is…… bowel cancer.

        1. Jams O'Donnell

          Exactly. The temperature rise in the Jurassic took place slowly over thousands of years, allowing evolution to adapt species to new conditions – we are doing it in a few decades.

      1. steppenwolf fetchit

        So between 5 degrees hotter favoring reptiles over mammals and thereby leading to the extinction of most mammals, especially mid-sized and large ones . . . . and the super-fast speed of our current warmup — within historical instead of geologic time — carbon skydumping ( CO2, methane and etc.) and nitrogen oxides skydumping are indeed a couple of things worth fixating on, among others.

        As well as carbon skyflooding driving ocean acidation, which will eventually extinct all the species of sea life which taste best and which we like to eat the most.

  6. TomDority

    The fact that if I am able to take advantage of the new ‘operating system’ from Microsoft – I have to have a more computationally intensive chipset – so I am forced onto the cloud and forced to upgrade my computer -for what ? I got all the power I need with the already bloated operating system – my phone is more than enough – It feels like I am forced into upgrade fever, being hooked then crooked into dishing out dollars for nothing in return except the satisfaction that I have been duped by a monopoly again – without recourse —
    Wide spread data breaches, identity theft… I sometimes wonder if the folks providing protection are running a protection racket…. you know, doing the breaching to enable the sales of their products. The old- pay us so we don’t burn down your business method of business

  7. Mikel

    All the chips needed for data centers and autos use a lot of fresh water. “Drought” conditions, huh?

    Meanwhile, the talk is having people drink recycled sewage?
    Wake the hell up, everyone.

    1. SocalJimObjects

      TSMC is also building a semiconductor factory in Arizona, so I guess they are optimistic there won’t ever be a drought? The calculation involved is way above my paycheck.

  8. Jams O'Donnell

    All this talk of EV’s, Data Centres and Grid capacity is by the way. The reality is that either the developed industrial countries reduce their living standards drastically and voluntarily, to the level perhaps of Haiti or Bangladesh*, or it will happen anyway in a much more uncontrolled and devastating way in the medium future. From where I’m looking, option 2 seems to be the direction of travel.

    *For a graphic illustration of this see:

    1. TomDority

      I do not believe living standards need be reduced – where Haiti and Bangladesh are concerned their living standards were entirely man made IMO for geopolitical and societal reasons – as has been recognized for some time – all famines up to this time are man made.
      What needs reduction is the overuse of energy and the overuse or overconsumption – driven by consumerism where sales of products that use energy to make are made to require replacement with the next iteration. That and the speculation in all things required for living driving up the costs to such a high level that – not only are living standards decreasing but the means of increasing the standards of living while transitioning into a sustainable planet level ((diversified specie=resilient, verdant, flourishing ecology etc. + ))=(higher living standard) ecosystem are increasingly out of reach.
      The more we humans try to dominate and kill other humans, put ourselves at the pinnacle of evolution – put our economic system as the fullest expression of human endeavor while disregarding and degrading the only habitable ecosystem that we evolved into and now expect that ecosystem to evolve into our ideal (whatever that is) is delusional and should discredit what an AI will do given the course and learning that we (penultimate) humans will give AI as it learns to imitate its creators.
      I apologize for my rantings as I believe we humans can do great good and should do great good in at least returning this planet to the dynamic and fantastically diverse teaming of life and beauty it once most assuredly was. As for who should clean it up? -all of us – as for who is at fault? – humans
      As for why we fight and argue? maybe we ought to look at some of the drivers but, IMO it’s this neo-liberal financial corporatist capitalist system (now militarized) that is driving us to extinction
      Jeez – can’t even believe what a lunatic I look like

  9. gregory christainsen

    Keep your eyes on Larry Page and Sam Altman, two chosen ones. Google co-founder Page has explicitly said that he does not believe in regulatory oversight of AI because this would be to favor human intelligence over artificial intelligence, which would be, in his words, “specieism,” which is supposedly akin to “racism,” which is THE WORST THING EVER.

    Altman, a member of the elites’ Bilderberg Group, is CEO of OpenAI, which by now has been converted from a nonprofit to a mostly for-profit enterprise.

    Note also Eric Schmidt, the former CEO of Google, who has already organized a think tank to research military applications for AI and is particularly involved in AI-guided drones.

    This is in addition to an already-active bioweapons program.

    1. steppenwolf fetchit

      Wouldn’t it be neat if the Yes Men showed up wherever/whenever Page appears in public advocating for stopping the War on Cancer, because Cancer is a life form and Cancer Has Rights Too. Some people might “get” the satire involved.

  10. Mikerw0

    I know I am late to commenting on this, but… there are two underlying issues. First, datacenters and crypto, among other things, are in essence tolling electricity. They effectively pass the cost through. But, they seek preferred tariffs for their power (much lower than residential).

    Second, not enough mention of the cost power,. Yes you could do wind and solar with batteries. The issue is it would be cost prohibitive. Natural gas is plentiful and cheap in the US, so right now when seeking baseload power it is the go to option (put differently, its the only option right now).

    Also, to a comment above about SMRs, they are proving to be very expensive on a per MW basis and still years away, if ever, ask Nuscale.

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