Data centers fueling massive growth in electricity demand

A report issued by the consulting firm Bain & Company earlier this month contained this eye-catching finding regarding data center growth:

US energy demand could outstrip supply within the next few years; meeting demand would require utilities to boost annual generation by up to 26% by 2028.

Bain opens their piece with a bit of a warning:

Facing potentially overwhelming demand from data centers, US utilities are grappling with a challenge few executives anticipated: After years of navigating flat or shrinking demand, many organizations have forgotten what it takes to grow. 

For years, we’ve heard and read about the coming electric vehicle revolution and “electrification” with the war on gas stoves and the like. But it’s the humble and workmanlike computer server behind this new, for real, electric power revolution.

I wrote last week about how data center growth is behind an apparent renaissance in nuclear power in America. As Bain explains, it’s the artificial intelligence (AI) boom behind the need for massive amounts of new computing capacity. And those computers need electric power to run their circuits and cool the rooms they are stored in.

Utilities have traditionally divided up their customer base into three categories — residential, commercial, and industrial. As Bain explains, a new, fourth category — data centers — will quickly become the largest, accounting for 44 percent of total electricity demand.

The obvious downside: higher electricity bills for the rest of us. Bain explains:

In the US alone, adequately funding the capital investments to serve data center growth over the next decade would require utilities to generate 10% to 19% in additional revenue each year than previously forecast… That could incrementally increase customer bills by 1% annually through 2032, according to our analysis.

Minnesota is not immune from this new industry trend. To prepare, the state Public Utilities Commission (MPUC) is devoting its Tuesday, October 29, planning session to the topic of “data center development in Minnesota.” Over a four-hour period, the Commission will host four panel discussions, touching on all aspects of the topic.

Stay tuned!