US power, tech companies lament snags in meeting AI energy needs
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[April 20, 2024]
By Laila Kearney
NEW YORK (Reuters) - U.S. electrical systems are not expanding fast
enough to meet rapidly growing power needs of technology like Generative
AI, prompting data center businesses to sometimes bypass utilities,
executives said at an energy conference this week.
Layers of regulations, citing and permitting processes, and frequent
legal fights brought by environmental and community groups, have slowed
new power projects from connecting to the grid, and posed a threat to
profits by traditional power companies like regulated electric
utilities.
"Regulation and permitting within the United States is abysmal," Brad
Stansberry, who leads the financial management practice for the power
and utility industry at services firm KPMG, said at the AI: Powering the
New Energy Era summit in Washington on Wednesday.
The delays have led data center businesses to bypass utilities and
strike deals directly with power generators or build their own supply.
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Data center developer Aligned, which is one of the biggest companies of
its kind with 2.5 gigawatts of capacity, is hastily pursuing power
supplies after spending several years focusing on buying land for its
operations.
"We always assumed there would be power, but obviously that assumption
was woefully inaccurate, so now we're chasing where power is," said
Phill Lawson-Shanks, Chief Innovation Officer at Aligned.
Among its considerations for electricity, Aligned is looking at using
small modular reactors, or a type nuclear energy system that is
currently in development in the United States, to power some of its
projects, and is working with utilities on projects when possible,
Lawson-Shanks said. "Where we can't, we will have to have them behind
the meter," he added.
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Figurines with computers and smartphones are seen in front of the
words "Artificial Intelligence AI" in this illustration taken,
February 19, 2024. REUTERS/Dado Ruvic/Illustration/File Photo
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Power companies also lamented the constraints with meeting the
electricity needs of companies supporting chatbots like ChatGPT,
which requires about 10 times the energy as a Google search, and
other forms of artificial intelligence.
"It's difficult to get anything built quickly," said Michael Keyser,
who heads National Renewables Cooperative Organization, which
represents about two dozen generation and transmission cooperatives,
along with distribution cooperatives. "So I think it's a natural
outcome of that for why you see data centers and tech companies
pursuing their own power purchasing now."
Regulated power utilities cited slow regulatory process to expand
their systems, particularly with the demand for renewable energy
such as solar and wind, while also hoping the surge of demand by big
technology would help their companies grow.
"If you're driving that bus, it's actually going to be easier for
us," said Brian Bird, chief of electric utility and natural gas
company NorthWestern Energy, referring to technology companies
taking the lead in power generation.
(Reporting by Laila Kearney; Editing by Liz Hampton and Josie Kao)
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