Data Centers: Challenges and Opportunities for Utilities
The rapid expansion of data centers across the country is creating new challenges for electric utilities. According to the U.S. Department of Energy, data centers are one of the most energy-intensive commercial building types, consuming ten to fifty times the energy per floor space of a typical office building.
Data center energy use in the U.S. has doubled over the past three years and is expected to grow nearly sixty-seven percent from twenty-one to thirty-five gigawatts by the end of the decade, according to FERC. EPRI reports that by 2030, data centers could account for up to nine percent of all U.S. electricity consumption.
In markets that are experiencing explosive data center growth, utilities are being challenged to generate significantly more power and deliver it where it’s needed, while also staying on track to meet their own sustainability goals. Several states continue to offer tax breaks and other economic incentives to attract new data centers.
Others have paused these programs out of concern that too much data center development too quickly in any one market can harm the reliability and affordability of local electric grids and force utilities to quickly generate more power from traditional energy sources to meet immediate demands.