The Data Center Challenge: Building AI Infrastructure to Power Load Growth
The Perfect Storm: Data Centers and Grid Capacity
In recent years, the electric grid has faced unprecedented challenges as data center growth, particularly driven by artificial intelligence (AI) applications, has led to a surge in electricity demand. This rapid expansion is putting significant strain on our aging transmission infrastructure, creating a critical need for innovative solutions to maintain grid reliability and support economic growth.
LineVision’s Jon Marmillo and Hilary Pearson were joined by Brian George (Federal Lead for Energy Market Development at Google) and Brian Janous (co-founder of Cloverleaf Infrastructure and former Microsoft) to share their perspectives on data centers, grid capacity, and the need for innovation as part of LineVision’s webinar, “The Data Center Challenge: Building AI Infrastructure to Power Load Growth”.
A Grid Under Pressure
Hilary Pearson provided context on the surge in data center electricity demand and the challenges utilities face in meeting demand while maintaining grid capacity. Key challenges include:
- Surge in Demand
Projections indicate that data centers could account for up to 9% of U.S. electricity generation by 2030, which is more than double their current consumption.
- Aging Infrastructure Causing Transmission Bottlenecks
Many utilities are grappling with outdated transmission systems that were not designed to handle the massive loads associated with modern data centers. The U.S. saw a drastic decline in new high-voltage transmission line installations, dropping from an average of 1,700 miles per year in the early 2010s to just 55 miles last year.
- Interconnection Delays
Data centers require immediate access to power upon startup, which contrasts sharply with traditional industrial loads that ramp up over time. The interconnection process for new data centers has become increasingly competitive and slow, with one utility in Texas reporting a 700% increase in interconnection requests within a single summer from 1 gigawatt to 8 gigawatts.
- Cost Implication
The rising demand from data centers necessitates substantial investments in both generation and transmission capacity upgrades, which could lead to increased electricity costs for consumers. Analysts predict that utility revenue requirements may need to rise over the next decade to meet this demand, potentially resulting in an additional 1% increase in customer bills each year through 2032. Such cost increases could limit the growth potential of data centers if passed on to consumers.
- Grid Reliability Concerns
As data centers consume vast amounts of energy, particularly during peak usage times, there are growing concerns about grid reliability. Utilities must manage not only the increased load but also ensure that they can maintain stable service without risking brownouts or outages during high-demand periods. The challenge is exacerbated by seasonal peaks in electricity use, such as hot summer afternoons and cold winter evenings.
Load Growth is an Economic Opportunity
Brian George emphasized the current bottlenecks to meeting rapid load growth: "We see lack of access to both energy power generation and the transmission system as a key risk to continued growth."
Brian shared his perspective on maximizing existing grid infrastructure before building new transmission lines, viewing load growth as an opportunity for economic development. “We’re talking about reshoring of domestic manufacturing. We’re bringing jobs and industry back here to the United States. This has been a policy objective for a very long time and we’re finally seeing it happen.”
Collaboration with Utilities is Key
Brian Janous highlighted collaboration in working with utilities to tackle the projected spike in load growth. “The scale of the problem we’re talking about is a grid-scale problem. We’re building grid-sized assets that need a grid solution. There’s a reason we have the grid. The diversity of the grid is so much more valuable than islanding on a power plant. And we have to find ways to work closely with utilities, both on innovative tariff solutions and the analytics of how we find the right technologies in the right places that start to unlock incremental capacity.”
Other key areas for cooperation were explored like supporting clean energy integration and grid optimization, improving load forecasting, and advocating for supportive policies to enable the adoption of new technologies.
All speakers agreed that addressing the challenges of data center growth and grid capacity requires a collaborative approach, leveraging both technological innovations and new business models to ensure reliable, affordable, and clean energy for all consumers.
Short and Long-Term Planning to Meet Demand
Short and long-term planning in the face of rapid load growth was at the forefront of the webinar discussion. Brian Janous presented short and long-term planning questions utilities should be asking as they face the increase in demand presented by data centers:
- How do we think about the load side of the equation in terms of the potential for flexibility?
- How do we leverage Grid Enhancing Technologies?
- How do we leverage batteries as storage?
- How do we get those technologies to point to particular spots on the grid where we can deploy these gigawatt-scale data centers?
- What assets are we going to have to bring into the equation now?
- How can we find ways to bridge the next four to six years to the 2030s, when we will have more flexible options like longer duration batteries, nuclear, geothermal, all things that can be done at a much larger scale?
Brian strongly advised that we have to, in essence, buy time. And the way to do that is to get more out of the existing system through innovative tariff solutions and grid-enhancing technologies.
Dynamic Line Ratings: A Powerful Solution
Hilary explained the impact of Grid Enhancing Technologies: "By utilizing Grid Enhancing Technologies like dynamic line ratings (DLR), it's helping to give utilities the best data about how much power can safely flow through that backbone. That data can help alert potential anomalies that could pose a risk to grid reliability and ultimately help to ensure that we're not leaving capacity on the table as we look to expand and build the grid of the future."
Dynamic line ratings have emerged as a promising tool to optimize existing transmission infrastructure. Here's how DLR can address everyday concerns:
- Unlocking Hidden Capacity
DLR technology can increase line capacity by up to 40%, effectively "unlocking" additional transmission capability without building new lines.
- Rapid Deployment
Unlike traditional transmission projects that can take 5-10 years to complete, DLR systems can be implemented in a matter of weeks, providing a quick solution to pressing capacity needs.
- Cost-Effective
By maximizing the use of existing infrastructure, DLR helps utilities defer or avoid costly new transmission projects, potentially saving millions of dollars.
- Enabling Clean Energy
DLR can help alleviate congestion that often prevents renewable energy sources from reaching the grid, supporting decarbonization efforts.
- Enhancing Grid Resilience
Real-time monitoring provided by DLR systems allows operators to better manage the grid during extreme weather events, improving overall system reliability.
The Path Forward
While the demand from data centers presents significant challenges for utilities, it also offers opportunities for innovation and collaboration between tech companies and energy providers. By leveraging new Grid Enhancing Technologies like DLR and optimizing existing resources, utilities can better manage the evolving landscape of electricity demand driven by digital transformation and AI advancements.
As Brian George put it: "Yes, it's a huge challenge. We should be thinking about innovative ways to solve the problem. But not interconnecting, frankly, is not an option."
Watch the full webinar HERE
