I've seen a lot of coverage recently — my own included — on the enormous strain data centers are placing on the US electric grid.
Big Tech needs more power to run AI workloads, and utilities across the country are racing to build the infrastructure needed to deliver it.
One angle I've not seen much coverage of in the national media is the question of cost — who, exactly, will pay for AI to come online?
As Dan Geiger and I learned while reporting this story for Business Insider, the answer could be...you.
Changing the electric grid in the US involves a lengthy regulatory and bureaucratic process, which would seem to be a major challenge for data center operators. It is — but in a lot of ways, it isn't.
Building new grid infrastructure is a pretty good deal for both the power companies and Big Tech. If a data center operator wants to open a facility in a location that isn't equipped to provide the needed electricity, no problem — most power companies in the US are incentivized to do big construction projects because they can recover the costs (and then some) by charging ratepayers.
What this means is that all customers — not just the data centers the new infrastructure is supporting — end up responsible for some, if not all, of the construction costs.
Data center operators and utilities will tell you this isn't the case, but state ratepayer advocates across the country are protesting the cost allocation methodology on some of these projects, insisting that ratepayers will end up holding the bag.
One argument from the data center industry is that data centers are such large customers that they'll end up paying more than their fair share of construction costs because of their large electric bills. But in some cases, companies like Amazon Web Services (AWS) and Meta have struck (or are attempting to strike) deals with utility providers like AEP Ohio and Xcel Energy that would significantly discount their electric bills.
There's a lot going on in this story — if you work in any of the relevant fields (data centers, AI, utilities, grid and transmission, state regulation) we'd love to hear your thoughts. Give it a read and let us know in the comments — or you can always send an email to ethomas@insider.com.
#datacenters #genai #electricgrid
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