UPDATE As the demand for more power to boost technology and support AI growth creates a need for more data centers to handle the digital capacity, local economies are bracing for the resulting power drain necessitated by the centers. Electric utilities said data centers represent expanding job and business opportunities, and as Reuters reports, after a lull in electric utility shares in 2023, there has already been a four percent surge in 2024, as more data centers start powering up. Industry predictions estimate that data center usage is expected to triple globally from less than 15 terawatt-hours (TWh) in 2023 to 46 TWh by the end of 2024.
“The truth of the matter is these things [data centers] are pigs when it comes to energy use,” noted Morgan Stanley analyst Eric Woodell, “And now they’re the size of an elephant.” Sticking with that analogy, Woodell says local economies eager to host data centers are then faced with the dilemma of feeding the elephant without allowing the rest of the circus animals to go hungry.
Utility companies across the U.S. have reported an uptick in the need for more power, but there are concerns that the need may outpace the ability to grow and respond. “What we’re seeing in the market is that these projects are not coming online fast enough to meet the local demand for the data centers,” said Rystad Energy analyst Geoff Hebertson.
Some states, like Georgia, have tried to keep data center power consumption under control by eliminating tax breaks for new data centers, according to Reuters. Legislators said that they were concerned that the data centers operations would put a strain on the available power grid without meaningfully contributing to the state’s economy. Numerous other data center projects, however, are going full steam ahead in at least 14 other states, according to Reuters.
Reader Interactions