{"id":2312445,"date":"2024-06-17T04:58:00","date_gmt":"2024-06-17T09:58:00","guid":{"rendered":"https:\/\/vxartnews.com\/?p=2312445"},"modified":"2024-06-15T11:49:34","modified_gmt":"2024-06-15T16:49:34","slug":"data-centers-offer-energy-peril-and-promise-with-the-midwest-increasingly-in-the-crosshairs","status":"publish","type":"post","link":"https:\/\/vxartnews.com\/2024\/06\/17\/data-centers-offer-energy-peril-and-promise-with-the-midwest-increasingly-in-the-crosshairs\/","title":{"rendered":"Data centers offer energy peril and promise, with the Midwest increasingly in the crosshairs"},"content":{"rendered":"\n
Southeastern Wisconsin and the Chicago area are emerging as major players in the national data center explosion, most notably with Microsoft\u2019s $3.3 billion planned data complex near Racine, Wisconsin.<\/p>\n\n\n\n
Clean energy advocates in the region say data centers pose both a risk and an opportunity, as they can put major stress on the grid, prolong the lives of coal plants and spark new natural gas plants, but also facilitate significant renewable energy investment. Wisconsin utility We Energies, for example, cited demand from data centers in its recent requests to the Public Service Commission for 1,300 MW of new gas generation. Microsoft, meanwhile, has promised to build renewables in the state while also likely creating demand for new or continued fossil fuel energy.<\/p>\n\n\n\n
The organization Data Center Map<\/a> shows more than a hundred data centers in the Chicago area and a handful in Southeastern Wisconsin<\/a>, often located on the site of former coal plants or industrial operations. A data center is underway on the site of the shuttered State Line coal plant<\/a> just across the border from Chicago in Indiana. The data center developer T5 recently announced plans<\/a> for four to six data centers totaling 480 MW of capacity and costing as much as $6 billion in the Illinois town of Grayslake near the Wisconsin border, adding to data centers it already runs in the region. <\/p>\n\n\n\n Virginia has long been known as \u201cData Center Alley<\/a>,\u201d with about 70% of global internet traffic passing through its servers, according to the Wall Street Journal. Dominion Energy said that because of data centers, its electricity demand in Virginia could quadruple and represent 40% of total demand in the state over the next 15 years. Georgia and Tennessee have also seen much data center construction and speculation. Utilities like TVA, Duke and Dominion have announced plans to build more gas plants and keep coal plants open longer in that region<\/a>, along with building renewables.<\/p>\n\n\n\n Meanwhile, some experts say the Great Lakes region is an increasingly promising spot for data centers because of its cooler climate that reduces energy demand and the availability of water.<\/p>\n\n\n\n \u201cThere is no better place\u201d for data centers than the Upper Midwest, said Josh Riedy, who helped design North Dakota\u2019s first tier-three data center, referring to a data center with high reliability \u2014 on a scale of one to four tiers \u2014 that includes multiple power sources. Riedy also founded Thread, a grid maintenance software company that he\u2019s marketing as especially helpful to serve data center demand.<\/p>\n\n\n\n \u201cThe Upper Midwest can export data around the globe,\u201d Riedy said. We\u2019re starting to see the tide turn, it\u2019s just natural.\u201d<\/p>\n\n\n\n Projections abound regarding the way data centers \u2014 including those processing cryptocurrency and running AI applications \u2014 will increase energy demand nationally and end an era of stagnant load growth.<\/p>\n\n\n\n Last year, the Federal Energy Regulatory Commission predicted 4.7% load growth over the next five years, up from 2.6% previously estimated for five-year growth. Data centers \u201csupercharged by the rise of artificial intelligence\u201d will require between 9 and 13 more GW of electricity over the next five years, according to seven case studies analyzed in a December 2023 report by the Clean Grid Initiative<\/a>, which does not include data center estimates for MISO or CAISO (California) regional transmission organizations. A McKinsey & Company report predicted 35 GW of total demand from data centers by 2030. <\/p>\n\n\n\n Load growth sparked by data centers comes on top of a shift from fossil fuels to electric heating, cooling and transportation. A 2022 report commissioned by Clean Wisconsin and RENEW Wisconsin found load growth could increase to 166% of 2022 levels with building and vehicle electrification needed to meet the state\u2019s goals of net-zero emissions by 2050.<\/p>\n\n\n\n \u201cEverything from data centers to manufacturing to AI to cryptocurrency,\u201d said Sam Dunaiski, executive director of RENEW Wisconsin. \u201cThese all could be triggers for new load, and it all could be coming to Wisconsin, though it\u2019s not unique to Wisconsin. Things like solar and battery manufacturing are coming online that ironically need new load growth too. We think the best way to meet that new load both environmentally and economically is through renewables and transmission to go along with it. This is a great opportunity for a low-cost renewable energy boom in the state.\u201d<\/p>\n\n\n\n Along with the generation demand, Riedy noted, come needs for grid updates and resiliency, which can ultimately help the grid as a whole.<\/p>\n\n\n\n \u201cIf you\u2019ve built and designed a data center, you know the nature of them is in many ways fundamentally different than most energized structures,\u201d Riedy said. \u201cWalmart, for example, is going to consume power, but it will have peaks, and constant power is important but not in the way it is to a data center. With crypto mining or AI model training, you see machines running at near peak performance around the clock. That\u2019s producing a type of strain on the grid that has few comparisons.\u201d<\/p>\n\n\n\n Microsoft\u2019s energy plans \u2014 like many details about the massive data project \u2014 are not yet clear, and the company\u2019s ambitious climate goals give advocates hope that the company will finance much new renewable generation either on-site or through power purchase agreements. The company has announced it will build a 250 MW solar array<\/a> in Wisconsin.<\/p>\n\n\n\n But Microsoft will likely also purchase power from We Energies, fueling advocates\u2019 worries about new natural gas generation and rate increases for regular customers.<\/p>\n\n\n\n The data center will be located on the sprawling site between Milwaukee and Chicago that was previously slated for an enormous LCD screen factory by the company Foxconn. That plan was repeatedly scaled back and then scrapped in the face of economic issues and local opposition.<\/p>\n\n\n\n Citizens Utility Board executive director Tom Content noted that \u201cunder state law passed for Foxconn, Microsoft is eligible for discounted market-based electricity rates. They would pay basically for the transmission and distribution, but a portion of their rates would just be set at wholesale market rate,\u201d rather than the retail amount customers usually pay. <\/p>\n\n\n\n In February, a subsidiary of We Energies filed a plan with the Wisconsin Public Service Commission for an estimated $304 million in grid upgrades related to the Microsoft project. Public auditors filed a letter<\/a> with the commission noting exemptions that allow less oversight because the project is in a special technology zone.<\/p>\n\n\n\n The Microsoft plan was touted by President Joe Biden as an example of reinvigorated Midwestern investment, but it has faced concerns about its energy and water use. Meanwhile Microsoft has faced setbacks<\/a> globally in reaching its climate goals, in part because of the massive energy demand of artificial intelligence applications.<\/p>\n\n\n\n Advocates said utilities may use data centers to justify more investment that earns them a rate of return, even when it is not necessarily needed.<\/p>\n\n\n\n \u201cWe are concerned that there could be an overinflation of expected demand in order to capitalize on this trend and build more gas as a last-ditch effort,\u201d said Ciaran Gallagher, energy and air manager for Clean Wisconsin.<\/p>\n\n\n\n \u201cThere\u2019s a little bit of a sky-is-falling scenario here,\u201d Dunaiski agreed. \u201cIn the early 2000s we saw this with load growth [projections] particularly around the internet. People thought the internet would cause our electricity generation needs to explode. They increased, but there were improvements that came with it \u2014 infrastructure getting more efficient, and software.\u201d<\/p>\n\n\n\n That precedent raises questions about the rush to build out gas power to accommodate projected demand.<\/p>\n\n\n\n \u201cGas isn\u2019t coal, but we shouldn\u2019t be striving for the second worst option, for the environment or for our pocket books,\u201d Dunaiski continued. \u201cIf we build these gas plants, customers will be paying for them for the next 20, 30 years.\u201d<\/p>\n\n\n\nGrowing load<\/strong><\/h2>\n\n\n\n
Microsoft and more<\/strong><\/h2>\n\n\n\n
Cost concerns<\/strong> <\/strong><\/h2>\n\n\n\n