Study Claims Demand Management Could Contain Data Center Electric Strains

A study by the Information Technology & Innovation Foundation predicts that the electrical grid nationwide will be able to meet massive increase in energy demand created by internet data centers. However, it will require significant efforts by data centers to manage their peak demand.

“Data center loads on the grid, especially at peak times, can be flexible enough that most of the apparent conflict between data centers and other users for scarce energy can be avoided,” concludes the study, “The United States Needs Data Centers, and Data Centers Need Energy, but That Is Not Necessarily a Problem.”

The study estimates that “up to 40 percent of data centers’ needs are not highly time sensitive, so they can be partners in managing peak demand by proactively shifting some of their use to different times and even different geographies.”

Companies planning future data center construction envision artificial intelligence campuses, with data centers surrounded by other businesses with high electricity demand being powered by on-site generators and bypassing the grid. Early generators would use natural gas, eventually converting to nuclear power after several years.

“But all that new capacity is some years away,” the ITIF study says. “Manufacturers have a five-year backlog for gas turbines. Solar is quicker to build but harder to permit, and locations are usually not that close to demand so transmission is needed.” Nuclear solutions are “at least” a decade away, the study claims.

In the near term, new data centers may have to rely on the grid. The study recommends that data centers develop national industry standards centered around demand management techniques. Data centers, the study says, have the ability to “reallocate work” among themselves over wide geographic areas. “That would allow data centers and utilities to formulate connection agreements that support the grid rather than threatening it,” the study claims. Near-term data center investments would include battery systems for backup capacity.

From the utility side, the main problem is transmission lines, which in many parts of the country need upgrades even before the added demand created by data center activity. The sort of work-sharing the study describes could be hampered by weak transmission connections between the East and West Coasts. Utilities may not have enough incentive to build the needed transmission lines.

“Utilities have historically been highly risk averse. They offer a safe investment for reliable returns, so speculative investments are simply not part of the model. Utility executives are well aware of this—and people who crave excitement do not typically become senior utility executives,” the study concludes.