Can ERCOT keep up with surge in electricity demand?
Rapid expansion of data centers for AI platforms could test state’s grid capacity
WASHINGTON — The rapid expansion of data centers, fueled by the rise of artificial intelligence platforms and the increasing digitization of the economy, is driving a surge in electricity demand in Texas and across the country that could soon be pushing the limits of what power grids can handle.
Grid operators such as the Electric Reliability Council of Texas are rushing to adjust their demand forecasts amid projections by consulting firm McKinsey and the International Energy Agency that power load for data centers, which already consume 4% of the power on the U.S. grid, will double by the end of the decade.
In a recent podcast interview, ERCOT CEO Pablo Vegas said the rapid speed at which data centers such as the $800 million facility
Meta is building in Temple were coming online was “unheard of in terms of grid planning time scales.”
“Historically, you’ve always been able to have years to contemplate a massive manufacturing facility coming online,” he said on the Energy Capital podcast. “Now we’re seeing 500- and 700-megawatt data centers being built in a year.”
ERCOT reported earlier this month that peak power loads on its system would rise 6% by 2030 to 94.3 gigawatts — with the caveat there was an additional 62 gigawatts of additional load asking to connect to the grid. It didn’t detail where those load requests were coming from, and ERCOT declined to make officials available for this story.
But Doug Lewin, an energy consultant in Austin, said data centers, along with new manufacturing facilities such as the semiconductor plants being built around Austin, crypto currency mining operations and growth in oil production in West Texas, were responsible for much of the new load requests.
“Some of (the 62 gigawatts) will come, some of it won’t,” he said. “But even if it’s just one-third of that, in five to six years time that’s shocking.”
Those same conversations are happening in power grids across the country, as Google, Amazon, Microsoft and other tech giants race to build out computing infrastructure to accommodate not only new artificial intelligence applications but a society that is increasingly dependent on cloud computing systems.
Energy Secretary Jennifer Granholm earlier this month called rising power demand from AI and data centers a “problem” and said in an interview with Axios that conversations with tech companies needed to “accelerate,
because this demand for power is only going up.”
But data centers, upon which modern industries increasingly rely, also present a potentially large economic opportunity, with Gov. Greg Abbott actively courting tech companies to build in Texas.
Those companies are looking not just for electricity, but for zero-carbon electricity they need to meet corporate climate targets, said Bryn Baker, senior director of policy innovation at the Clean Energy Buyers Association, which represents large power buyers like tech companies.
“We’re fundamentally talking about not an energy transition but an energy expansion and it’s a major economic opportunity,” she said. “That growth is going to be here if we can provide the electricity. The grid is the constraint, and whether we can deliver those electrons will determine if these industries show up in Texas.”
For now, power grids are able to keep up with rising demand, but it’s an open question how long that can sustain.
Dominion Energy supplies power to Northern Virginia, which has the nation’s largest concentration of data centers and is known as the “crossroads of the internet,” and is predicting power demand across its entire territory will grow at a rate of 7.4% per year over the next decade.
Other hot spots for data centers include North Texas, Kansas City, Mo., Salt Lake City, Ohio and Pennsylvania, places where electricity and water, which is needed for cooling, are cheap, said Surya Hendry, an analyst with research firm Rystad Energy.
Rystad is studying the impact new data centers are having in individual markets such as North Texas, and in a note to clients earlier this month cautioned that while AI and cloud computing could eventually be used to better manage power loads, they were now “placing an unprecedented burden on grid infrastructure.”
“There’s a lot of talk and fear about the reliability of the grid and whether it’s prepared for these data centers,” said Reid Ramdathsingh, a senior analyst with Rystad.
Texas may well be better prepared than most to handle the onslaught of new electricity-hungry data centers.
Generation companies such as Calpine and NRG are waiting years to move through interconnection queues, with a flood of new solar, wind and battery projects overwhelming grid operators in other parts of the country.
Those wait times are far shorter in Texas, and with 330 gigawatts of generation projects in ERCOT’s interconnection queue at present, mostly solar and battery projects, Texas could theoretically keep up with the power hungry data centers, Lewin said.
“The big wild card is there’s going to be a lot of solar built in Texas. There’s already over 20 gigawatts, and it’s going to double in the next two years,” he said.
At the same time, the state Legislature has committed $5 billion for low-interest loans to facilitate the construction of new natural gas plants. And the Public Utility Commission of Texas has undertaken a series of projects to improve transmission capacity between regions and get more generation built to “help the state prepare for continued commercial and residential demand growth,” a spokesperson said.
Whether they can keep up with the boom in electrical demand remains to be seen. Three years after Winter Storm Uri left millions of Texans without power for days, politicians from both parties are increasingly weary of the vulnerability of the nation’s power grid.
Sen. Ed Markey, D-Mass., and other Democrats introduced legislation earlier this year ordering the National Institute of Standards and Technology to develop a framework to track the environmental impacts of artificial intelligence, including data centers’ considerable power and water demands.
And Rep. Randy Webber, R-Friendswood, said he and other Republicans were increasingly concerned about the power demands from AI and from electric vehicles, which will require the construction of hundreds of thousands of charging stations around the country.
“We don’t have a big enough grid to support all the energy demand we have now,” he said. “We have to increase the capacity of our grid. It’s that simple.”