Former top federal energy regulators are warning that the electric grid is not prepared to meet the demand placed on it by the growth of artificial intelligence in work, social, and daily life.
For months, researchers and experts have been sounding the alarm over the amount of energy data centers focused on AI use to house and process data swiftly. These facilities are home to tens of thousands of computer servers consuming massive amounts of energy.
While small facilities may only use between 1 and 5 megawatts of power, large data centers have been known to consume over 100 megawatts. One megawatt is considered to be roughly the same amount of energy consumed by 400 to 900 homes in one year.
An unprepared grid
With tech giants like Microsoft, NVIDIA, and Meta looking to lead the way in the AI revolution, the development of these data centers is only expected to increase — and power demand with it. Research has estimated that by 2030, data centers could be using upward of 9% of electricity generated on the grid, over double what they consume now.
Industry experts said the grid would be unable to handle that growth.
“Oh, gosh no,” Tony Clark, who served on the Federal Energy Regulatory Commission from 2012 to 2016, told the Washington Examiner. “I mean, that amount of load coming online that rapidly would be very, very difficult to serve in the short term.”
Marc Spitzer, who was with FERC from 2006 to 2011 after being nominated by former President George W. Bush, agreed, saying, “Not in its current state. But if we plan now, I think we can be going forward.”
The strain of AI is expected to hit consumers sooner than later, as grid operators are increasing rates for utility companies at a dramatic pace. PG&E customers saw rates raised by 17% at the start of this year, while PJM Interconnection, the largest regional transmission organization monitoring a multistate grid in the United States, is increasing its costs from $28.92 per megawatt-day to $269.92 per megawatt-day starting next year. This is a more than 800% increase that is expected to trickle down on consumers’ energy bills.
When announcing its rate increase in July, PJM said the hike was coming as the reliability of the grid is at risk due to power sources like coal decreasing and the demand for energy growing at a faster rate than renewable energy sources are being added.
With the excess of demand over supply, combined with the effects of extreme weather, grid monitor North American Electric Reliability Corporation has warned that rolling blackouts are a threat to consumers across the country.
Some industry insiders and lawmakers have placed blame on FERC and the Biden administration’s clean energy policies for the wavering stability.
“This is all about this administration, unfortunately, and how they’re dealing with this,” Rep. Troy Balderson (R-OH) recently told the Washington Examiner. “I think there was a perfect opportunity when they first came into office to deal with it, start addressing it.”
Meanwhile, former commission members said it will require several approaches to secure the grid.
Boosting reliability
For starters, Clark, who was nominated to the commission by former President Barack Obama, said it will include greater coordination with state governments, as well as what he calls “price formation.”
Prices set by market regulations implemented over the decades are not sufficient to ensure grids stay online, Clark said, given that the resources available in wholesale electricity markets devised have dramatically shifted.
“That means that FERC has to look to make sure that the way that prices are being formed in the markets are still supporting reliability and retention of units that are still needed for reliability,” Clark said.
Similarly, former Kentucky Public Service Commission Chairman Kent Chandler called for fair pricing, meaning customers can see prices reflecting the cost it takes to produce and deliver, as well as their share of the network they use.
“If a utility has to build a power plant to serve this big old load that’s about the size of the power plant, how do we make sure that the new customer is paying their fair share? Because before, unless that new customer showed up, that power plant wouldn’t have been built,” Chandler told the Washington Examiner.
Chandler said that without this analysis, it “doesn’t seem to make sense” to force customers to pay for half of a power plant they didn’t ask for.
Neil Chatterjee, who served on FERC from 2017 to 2021 after being appointed by former President Donald Trump, told the Washington Examiner that confidence in the grid revolves around transmission. He said that greater transmission is needed to grow the capacity of the grid and support higher demand.
Power backing the grid
Amid declining use of traditional energies, Republicans have begun to sound warnings over the Biden administration’s push for renewable energy sources, such as solar panels and wind turbines, saying it will be unable to keep up with the demand.
The GOP has criticized the administration as attacking natural gas production while boosting solar and wind technologies.
Clark, though, the Obama appointee, said gas will be key to stabilizing the grid.
“It’ll be a combination of resources that come in, but gas is realistically going to be a very, very important part of it,” he told the Washington Examiner. “When you look at the scale of how much load is coming online, it’s unimaginable that in a short term, you could build that much renewables and that much transmission.”
“I mean, a major transmission project takes a decade to get planned, permitted, [and] constructed in this country right now,” he said. “So then, you’re left with what’s viable, and what’s viable is natural gas.”
No matter which administration steps into the White House in January, Chatterjee said, there will be concessions for both parties regarding utilizing power for the grid.
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He explained that Democrats will need to recognize the value behind natural gas and, in some regions, coal to keep energy reliable and affordable. Republicans, meanwhile, will be forced to embrace more “flexible” resources, such as wind and solar.
“At the end of the day, this is an engineering solution, not a political solution, but there’s going to be trade-offs,” Chatterjee said.