As the data centre industry continues to grow rapidly, with particular buzz around the proliferation of emerging technologies like artificial intelligence, US domestic and global power demands are surging past previous predictions. Consider this case in point: according to a report from the International Energy Agency earlier this year, a ChatGPT search takes nearly 10 times the amount of electricity (2.9Wh) than a typical Google search (0.3Wh).

Markets across the US are struggling to come up with creative solutions to meet the needs of these new projects. Georgia Power, the utility company, recently updated its integrated resource plan in response to a staggering increase in the state’s load projections. In its 2022 filing, the projected load growth between 2024 and 2031 was under 400MW; that is now over 6,600MW.

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Project location decisions inhibited

The influx of data centres and other industrial users has also drained many communities’ supplies of large, ready-to-develop sites, which, in turn, is inhibiting project location decisions. Sky-rocketing demand for sites and power has led political leaders to consider eliminating Georgia’s data-centre incentive programme, and banning them in Atlanta’s high-density areas or near transit hubs.

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For data-centre providers, these constraints are making second-tier markets like Columbus, Ohio increasingly popular, particularly for cloud-service providers that are less driven by proximity to customers than co-location providers.

The increased interest is proving to be too much for some second-tier markets too, though, and some are looking for ways to cool things down. The demand in Ohio has grown to the point that American Electric Power has filed with the state for permission to require “take-or-pay” service agreements with data-centre and crypto-currency projects. If approved, new projects would be required to use 90% of their estimated demand and consumption, preventing them from reserving resources they aren’t using.

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A team sport

Yet, while some areas feel the need to put constraints on development, other areas are still eager and able to accommodate more data centres, which is a good thing if we are to keep pace with the ever-expanding need for computing power.

In July, Meta announced plans to develop a $800 million, 715,000 sq ft hyperscale data centre in Cheyenne, Wyoming, a decision influenced by the area’s infrastructure and available energy. Black Hills Energy agreed to work with Meta to add new capacity, including renewable sources.

When making their location decisions, data-centre providers can set themselves up for success by approaching projects in a way that engages utilities as strategic partners. Establishing a relationship and mutual flow of information from the onset of the project can set clear expectations and establish needs from both sides. These kinds of relationships can help both utility providers and communities strategise on ways to clearly meet ongoing energy demands.

An old industry adage is that economic development is a team sport. Today’s tight energy market makes a team approach more important than ever. Data centres are increasingly dependent on strategic partnerships with utilities and communities, but opportunities still exist to create win-win solutions.

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