To train models to perform many tasks that were previously performed by people, data centers for artificial intelligence need one thing, and much of it – energy. AI “Hyperscalers” massal cloud-computing organizations-giving public utilities an unprecedented challenge because companies are looking for reliable energy-based taxes at the lowest possible price. A recent Berkeley Lab report found data centers could rise to 12% of American power consumption By 2028 – an increase of 4.4% in 2023.
Although the prospect of these clients with 24/7 energy requirements can seduce for utility companies that are looking for reasons to build new baseload generation, experts say they should be wary of these Hyerscaler promises. Chinese AI company Deepseek has claimed that generative AI Can work with less energyBut it is still too seen whether or how quickly American companies will follow that lead to investing in energy-efficient activities. With many data centers who also do speculative planning in many different areas for utilities to find the best deal, it becomes difficult to determine their real-life energy needs.
“There is not much good reason to think that all those data centers will be built,” said Karl Rábago, a developer of renewable energy that previously worked as an utility company, commissioner and federal executive at the US Dept. Or Energy. “If someone who has been a regulator, but also a kind of developer and other things will tell you, there are no way in which data centers are much demand at today’s rates.”
Hyperscalers would like back room agreements with utility companies on low rates for their demand, and they often succeed, causing the motivation to increase efficiency internally and use less power, to eliminate Rábago.
“If the legislators and the supervisors and the usefulness are all willing to bend back for your load, you would be stupid not to play that,” he said.
Utility companies can run the risk that data centers will not need as much energy as they predict. Dominion Energy’s last rate proposal Contains a new tariff class for high energy users, such as data centers, to “ensure that these customers continue to pay the full costs of their service and other customers are protected against stranded costs.” Users within that rate class would be needed to make 14-year obligations to pay for the requested electricity, even if they use less.
If utility companies continue the trend of higher rates with long-term agreements for hyperscalers, the addition of co-relocated renewable energy sources to their energy mix can become cheaper for data center operators.
Data centers and renewable energy sources
Many of the largest hyperscaler companies have a history of investments in renewable energy. Microsoft and Google are the top 2 companies on the EPA’s Green Power Partnership National Top 100With green capacity that are 100% and 107% of their total energy consumption respectively.
“Many of the big names that come to mind have been deeply committed to renewable energy sources for some time, and have not only been involved in buying renewable energy from their energy suppliers in recent years, but also being busy with project development and helping new projects,” said Jennifer Martin, CEO of the Center for Resource Solutions (CRS)A non -profit organization that offers green certifications for companies. “For me it is not surprising that they would like to continue their obligations of renewable energy while looking at this new source of cargo growth for themselves.”
In recent years, these companies have drawn Solar PPAs with developers such as Silicon Ranch, Avangrid and EDP renewable energy sources, largely motivated by internal goals for clean energy.
The Solar Farm from Bancroft Station is part of a portfolio of Silicon Ranch projects that deliver electricity to Walton Electric Membership Corporation (EMC) as part of the agreement of the utility to supply 100 percent renewable energy for the Meta data center in Newton County, Georgia.
“Data centers were some of our first customers, and they have just continued to grow since that time,” says Adrian Markocic, senior director of the market strategy at Silicon Ranch. “Because they are the ones who control the load growth, parallel to that, they also become one of our greatest customers.”
Silicon Ranch had 2.5 GW under contract with data centers clients in 2024, including with a data center developer channel, in which Silicon Ranch corresponds to existing solar projects in the pipeline with regional needs of tract.
“There was a moment when a green electron was the most valuable electron. Well, we have now come to a point in time when the most valuable electron comes first on the market, and Solar offers that electron,” said Markocic.
Tract develops data center parks that are the transmission capacity, water, sewer, roads and foundations prior to the plan to offer campuses customers for immediate use. Silicon Ranch helps a tract with site acquisition and interconnection processes for solar and battery projects on utility scale.
“Our relationship with Silicon Ranch has developed over the past two years on the basis of a joint recognition that delivering speed and security for tomorrow’s data center can not rely on the processes and commercial models that have supported data centers to date,” said Grant van Rooyen, CEO of Tract, CEO and Managing Partner, in a press release.
Matching energy needs for data center with existing solar projects in the pipeline is the prospect of Nora Esram’s white paper for the American Council for a Energy Efficient Economy (Acee)“Convert data centers into grid and regional assets.“
“Ultimately, we have to build more generation and transmission. But in the next three to five years we can meet that question by looking at what we already have assets on the grid-om find out, how do you optimize existing assets?” said Esram, former senior director for research at Acee and current CEO of the New buildings Institute.
A 2024 Study by Berkeley Lab It revealed that almost 2.6 GW of the total generation and storage capacity was awaiting the connection with the grid-by-from which more than 95% was for zero-carbon sources such as solar, wind and battery storage.
Although existing assets are abundant, an extra push of state policy is necessary for data center developers to pursue renewable energy sources as their electricity demand rises, Esram said. These policy drivers can add state stimuli for data centers that record efficiency standards and contribute to the regional, just like a virtual power plant and/or Microgrid.
“I think the problem is that we don’t have an easy way to measure what is still considered as a ‘good behavior’ data center. But having said that, I think we know that it is just a matter of getting a consensus of what that looks like, and those policy makers acknowledge that kind of measurement is that kind of measurement is to know or this regional center.
The country is still figuring out how to manage the potential energy tree by hyperscaler AI data centers, but renewable energy can play an important role – with the right stimuli pushing in that direction.
