HARRISBURG, PA — The projections are eye-popping, with utilities saying they will need two or three times as much electricity within a few years to power the massive capacity. new data centers that fuel the fast-growing artificial intelligence economy.
But the challenges—some say the impossibility—of building new power plants to meet that demand so quickly has raised alarms among lawmakers, policymakers and regulators who question whether these utility forecasts can be trusted.
One pressing question is whether the projections are based on data center projects that may never be built, raising concerns that regular ratepayers could be forced to build unnecessary power plants and network infrastructure costing billions of dollars.
Study comes after analysts warn of risk Artificial Intelligence Investment Bubble it's blown out of proportion technology stock prices and may burst.
Meanwhile, consumer advocates are finding that ratepayers in some regions — such as the Mid-Atlantic power grid, which covers all or parts of 13 states stretching from New Jersey to Illinois, and Washington, D.C. — are already picking up the cost of supplying power to data centers, some built, some not.
“There's speculation here,” said Joe Bowring, who heads Monitoring Analytics, an independent market watchdog for the mid-Atlantic power grid. “Nobody really knows. Nobody has looked closely enough at the forecast to know what's speculative, what's double counting, what's real and what's not.”
There is no standard practice for grids or utilities to review such large-scale projects, and finding a solution has become a hot topic, utilities and grid operators say.
Uncertainty about forecasts usually stems from several things.
One involves developers eager to get online but whose plans aren't set in stone or lack the clout—customers, funding or otherwise—to complete the project, industry and regulators say.
Another example is data center developers submitting grid connection requests in various individual utility territories, PJM Interconnection, which operates the mid-Atlantic grid, and Texas legislators.
Often, for competitive reasons, developers won't tell utilities whether or where they've submitted other power requests, PJM said. This means that one project could cause multiple utilities to inflate their energy forecasts.
Efforts to improve the forecasts received a high-profile boost in September when a member of the Federal Energy Regulatory Commission asked the nation's grid operators for information on how they determine a project is not only viable but will use the electricity it says it needs.
“Better data, better decision making, better and faster decisions means we can get all these projects, all this infrastructure done,” Commissioner David Rosner said in an interview.
The Edison Electric Institute, a trade association for commercial electric utilities, said it welcomes efforts to improve demand forecasting.
The Data Center Coalition, which represents tech giants like Google and Meta as well as data center developers, has called on regulators to ask utilities for more information about their projections and to develop a set of best practices for determining the commercial viability of a data center project.
The coalition's vice president for energy, Aaron Tinjum, said improving the accuracy and transparency of forecasts is a “fundamental first step toward actually getting to this point” in energy growth.
“Wherever we go, the question is: 'Is (energy) growth real?' How can we be so sure?” Tinjum said. “And we really see commercial readiness testing as one of those important capabilities that we can pursue at this time.”
Igal Feibush, CEO of data center developer Pennsylvania Data Center Partners, said utilities are conducting “fire drills” to try to test the flow of data center projects, all of which require electricity.
The vast majority, he said, will fail because many of the project's proponents are new to the concept and don't know what it takes to build a data center.
States are also trying to do more to figure out what's in utility forecasts and weed out speculative or duplicative projects.
In Texas what attracts big data center projectslegislators are still being persecuted blackout during the deadly 2021 winter storm, were shocked when the grid operator, the Electric Reliability Council of Texas, reported in 2024 that its peak demand could nearly double by 2030.
They found that state utility regulators lack the tools to determine how realistic that is.
Texas state Sen. Phil King said at a hearing earlier this year that the grid operator, regulators and utilities aren't sure whether the power requests are “real or just speculative or somewhere in between.”
Lawmakers passed legislation sponsored by King that is now law that would require data center developers to disclose whether they have requests for power elsewhere in Texas and set standards for developers to show they have a significant financial commitment to the facility.
PPL Electric Utilities, which supplies electricity to 1.5 million customers in central and eastern Pennsylvania, projects that data centers will more than triple peak electricity demand by 2030.
Vincent Sorgi, president and chief executive officer of PPL Corp., told analysts on a conference call this month that data center projects are “real, they're coming fast and furious” and that “the near-term risk of generation oversupply simply doesn't exist.”
The data center projects included in the forecast are backed by contracts with financial commitments often reaching tens of millions of dollars, PPL said.
However, PPL's forecasts helped prompt state lawmaker Rep. Danilo Burgos to introduce a bill that would strengthen the power of state utility regulators to review how utilities make their energy demand forecasts.
Ratepayers in Philadelphia's Burgos area have just absorbed an increase in their power bills that utility PECO attributes to the rising cost of wholesale power on the mid-Atlantic grid, driven largely by data center demand.
That's why ratepayers need more protection to ensure they benefit from higher costs, Burgos said.
“Once they make their money, no matter what the company is,” Burgos said, “you won’t see any compassion for the taxpayers.”
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Follow Mark Levy on http://twitter.com/timelywriter.
