The recent deal Microsoft struck with Constellation Energy for a direct electricity supply from the Three Mile Island nuclear plant has underscored tech companies’ anxiety about securing a sufficient flow of power amid concerns over the reliability of the electric grid and environmentalists’ clamor for green policies.
Industry insiders say the agreement comes as no surprise. Many point accusing fingers at the Biden administration for its failure to stabilize the national grid, risking blackouts and higher prices for consumers.
Warning bells have begun to ring, particularly about how much energy big data centers will need. These facilities, especially those focused on artificial intelligence, are home to hundreds of thousands of computer servers that hold and process data we all use every day. This covers anything from virtual video meetings, to Chat GPT requests, or AI-assisted Photoshop and chatbots.
To provide swift results and connections for consumers, these data centers consume massive amounts of power — and it is only expected to grow. The Electric Power Research Institute has estimated that by 2030 data centers could consume more than 9% of all electricity generated nationwide. That is more than double the amount it uses now. Top tech executives such as Meta’s Mark Zuckerberg admit that these developments are going to cause “energy constraints.”
At the same time, the market is being squeezed by the push of greener energy. The declining use of traditional power sources such as coal and other fossil fuels is providing proven benefits for the environment, the demand for energy is growing faster than renewables such as solar and wind can keep up. PJM Interconnection, the largest grid operator in the country, recently warned that this imbalance threatens the reliability of the grid.
The blame game
Some see this as a direct result of the Biden-Harris administration’s extreme climate goals. Rep. Troy Balderson (R-OH), who is leading the charge to repeal the Environmental Protection Agency’s Clean Power Plan 2.0, told the Washington Examiner that the White House must take a “lot” of blame.
“This is all about this administration unfortunately, and how they’re dealing with this,” Balderson said. “I think there was a perfect opportunity when they first came into office to deal with it, start addressing it.”
Over the last few years, the administration has faced criticism for its push to increase the use of electrification technologies such as electric vehicles and stoves, the closing of coal plants, and some rollback of natural gas production. President Joe Biden also earmarked hundreds of billions of dollars of spending on clean energy projects in the Inflation Reduction Act, including tax credits for solar panels and energy-efficient appliances. Biden touted a 2022 law while speaking in New York during Climate Week, calling it the “most significant climate law ever.”
Balderson and many of his Republican colleagues say, however, that this energy policy isn’t “working at all.”
“Even PJM says it’s not working,” the congressman said. “So when an RTO tells you that, we need to pay attention.”
Daniel Turner, the founder and executive director of Power the Future, an organization focused on energy policy, agreed, saying, “If you’re going to push people into this certain lifestyle, then you have to make sure that you’ve taken in all the variables and I don’t think they have.”
As a result, said Turner, businesses are forced to do it “on their own.”
“There’s a complete ignorance of what is required, and that’s because what should be simple, regulatory policy has now become politicized and weaponized,” Turner said, adding, “We have an administration that is incredibly ignorant but incredibly powerful, and the havoc they’ve wreaked on the electric grid, on energy prices, on world peace, are reverberating.”
Not everyone agrees that Biden and Vice President Kamala Harris should face the brunt of the criticism. When it comes to securing the grid, there are a number of players involved, including policymakers, independent agencies such as the Federal Energy Regulatory Commission, RTOs, utility companies, and tech giants contributing to increased demand. Depending on who you speak to, one group may be more responsible than others for failing to ensure consumer protections or misaligned goals.
But most agree that the way things are being addressed now isn’t sustainable.
For George David Banks, former energy climate adviser to former President Donald Trump, this can be attributed to tension within the Democratic Party between their climate goals and their overall energy security goals.
“I wouldn’t say it’s totally their fault,” he said of the administration. “But you more broadly apply it to Democratic policymaking.” Banks explained that often, clean initiatives focused on mitigating climate change, such as heavy reliance on offshore wind power, can conflict with energy security and manufacturing goals. Similarly, campaigns with goals to increase energy security, such as increasing production of natural gas, can often clash with climate targets.
Granholm pins it back on tech companies
For some in the administration, Washington shouldn’t be held accountable for the concerns of grid reliability, particularly when it comes to increased demand from data centers.
On Thursday, Energy Secretary Jennifer Granholm put the onus back on the tech companies building the facilities, saying they should be the ones to find extra power support. Granholm warned that as increased demand has a stronger effect on consumers, they will be less likely to support the tech developments.
“If that extra power cost is put on everyday citizens, then there will be no desire to see these data centers permitted and placed in the United States,” Granholm said during an AI+ Energy Summit in Washington. “Many of the data center companies have said, ‘We are willing to do this.’”
The secretary’s comments point to the future, and many tech companies, including Microsoft, have come forward with purchasing agreements to secure energy for their AI data center needs. Amazon struck an agreement earlier this year with Talen Energy to buy the decades-old Susquehanna nuclear plant in Pennsylvania.
While it isn’t the first of its kind, Microsoft’s agreement with Constellation Energy is unique because it would be one of the only ones requiring a nuclear plant to restart service in the U.S. after being decommissioned. If approved, the energy supplied to Microsoft is expected to pave the way for other industry leaders looking to power their data centers through colocation.
Industry experts have said these pacts can go a step further from federal regulation speeding up the process to obtain more energy.
“From my experience, federal involvement only slows the process down by adding layers of bureaucracy and a bunch of folks who don’t always understand both the technology and urgency,” said Sean Farney, the Vice President of Data Center Strategy at JLL Data Center Work Dynamics. He explained that nuclear energy solves many problems when it comes to sustainable energy supply, but new projects can take years to come online.
“But, this is where that invisible hand steps in, like with [Microsoft] and Talen, and finds a way forward,” he said.
Farney told the Washington Examiner he expects to see more of these innovative approaches to securing energy in the coming years as it refuses abandoned facilities, utilizes green energy, and doesn’t weaken power scarcity. Not everyone is convinced that nuclear will be AI’s saving grace; they are pushing for mixed power sources.
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“I have long advocated for the benefits of nuclear energy, especially as grid reliability becomes harder to obtain due to the Biden administration’s regulatory attacks on coal and natural gas,” Sen. Shelly Moore Capito (R-WV), the ranking member on the Environment and Public Works Committee, told the Washington Examiner.
“As energy demands increase nationwide, our country needs more energy from all sources — including coal, natural gas, and nuclear — to ensure the energy reliability and security we need to move forward with developments such as this,” Capito added.