Texas Power Grid Faces Unprecedented Demand Surge from AI Data Centers

Texas Needs Equivalent of 30 Reactors to Meet Data Center Power Demand

(Bloomberg) -- Demand on the Texas power grid is expected to expand so immensely that it would take the equivalent of adding 30 nuclear plants' worth of electricity by 2030 to meet the needs. That's according to the Electric Reliability Council of Texas, which manages the grid. The forecast is based on the addition of new data centers needed to power artificial intelligence. And it's raising concerns about whether infrastructure in the state will be able to expand fast enough -- and at what cost. Coming out of the pandemic, electricity demand on the Texas grid was already growing faster than anywhere else in the country. Now that's being supercharged by AI, with the state vying to become the data-center hub of the country, if not the world. Individual projects are already starting to request 1 gigawatt of power and they pose new risks to maintaining a stable grid, said Agee Springer, Ercot's senior manager of grid interconnections. A gigawatt is typically enough to power 250,000 homes in Texas. The data centers "present a reliability risk to the Ercot system," said Springer, who spoke on a panel at Infocast's ERCOT Market Summit in Austin this week. "We've never existed in a place where large industrial loads can really impact the reliability of the grid, and now we are stepping into that world." Risk of Grid Stress Ercot said it's gotten requests equal to 99 gigawatts for new connections to the grid from big power users, including data centers, bitcoin miners and hydrogen producers, according to an internal grid presentation Thursday. That's up from 40.8 gigawatts last March. The state grid is projecting that peak power demand will jump by 75% by 2030 from the current record of 85.5 gigawatts. The outlook was recently revised up sharply to factor in data centers on top of strong demand from the electrification of the economy. Listen: When a Small Town Gets a Big Data Center (Podcast) Ercot, lawmakers and regulators are trying to figure out how to bring online data centers without adding stress to the grid, which in extreme conditions increases the chance of blackouts, or if they can be throttled back when needed. "There can't be anymore demand than there is supply," said Beth Garza, a senior fellow at think tank R Street Institute. Infrastructure Needs There's a big question as to whether infrastructure can be built fast enough because of supply chain issues, resulting in long wait times for things like big turbines to produce electricity and other key equipment such as transformers. Another critical issues is who is going to pay for all of this build out. Data centers make money until power prices reach about $2,000 a megawatt-hour, but the price cap from Ercot is $5,000, Resmi Surendran, vice president of regulatory policy at Shell Energy north America, said on a panel at the summit in Austin. It's unclear whether data centers are willing to be flexible, but she noted that such ability to ramp and down in response to price signals - known as demand response - could help solve significant problems. Flexibility from data centers and other big electricity consumers, though, creates another issue: shifting costs for transmission projects to households and smaller businesses. This is because of a program launched about two decades ago that allows the state's chemical plants, refineries and even Bitcoin miners to reduce or eliminate millions of dollars of contributions for grid upgrades by throttling back their power usage during the highest demand periods of the summer months. Known as four coincident peaks, or 4CP, it was seen as a way to reduce stress on the grid during the hottest times of the year, when electricity is needed to run air conditioners. But this methodology for socializing costs is "just not right" as reliability risks have shifted, Texas Senator Charles Schwertner said in an interview at the event. A current Texas Senate bill is proposing to reform this. "We need to make sure the methodology respects all rate payers," Schwertner said.

Texas needs equivalent of 30 reactors to meet data center power demand

By Naureen S. Malik, Bloomberg News The Tribune Content Agency Demand on the Texas power grid is expected to expand so immensely that it would take the equivalent of adding 30 nuclear plants' worth of electricity by 2030 to meet the needs. That's according to the Electric Reliability Council of Texas, which manages the grid. The forecast is based on the addition of new data centers needed to power artificial intelligence. And it's raising concerns about whether infrastructure in the state will be able to expand fast enough - and at what cost. Coming out of the pandemic, electricity demand on the Texas grid was already growing faster than anywhere else in the country. Now that's being supercharged by AI, with the state vying to become the data-center hub of the country, if not the world. Individual projects are already starting to request 1 gigawatt of power and they pose new risks to maintaining a stable grid, said Agee Springer, Ercot's senior manager of grid interconnections. A gigawatt is typically enough to power 250,000 homes in Texas. The data centers "present a reliability risk to the Ercot system," said Springer, who spoke on a panel at Infocast's ERCOT Market Summit in Austin this week. "We've never existed in a place where large industrial loads can really impact the reliability of the grid, and now we are stepping into that world." Risk of grid stress Ercot said it's gotten requests equal to 99 gigawatts for new connections to the grid from big power users, including data centers, bitcoin miners and hydrogen producers, according to an internal grid presentation Thursday. That's up from 40.8 gigawatts last March. The state grid is projecting that peak power demand will jump by 75% by 2030 from the current record of 85.5 gigawatts. The outlook was recently revised up sharply to factor in data centers on top of strong demand from the electrification of the economy. Ercot, lawmakers and regulators are trying to figure out how to bring online data centers without adding stress to the grid, which in extreme conditions increases the chance of blackouts, or if they can be throttled back when needed. "There can't be anymore demand than there is supply," said Beth Garza, a senior fellow at think tank R Street Institute. Infrastructure needs There's a big question as to whether infrastructure can be built fast enough because of supply chain issues, resulting in long wait times for things like big turbines to produce electricity and other key equipment such as transformers. Another critical issues is who is going to pay for all of this build out. Data centers make money until power prices reach about $2,000 a megawatt-hour, but the price cap from Ercot is $5,000, Resmi Surendran, vice president of regulatory policy at Shell Energy north America, said on a panel at the summit in Austin. It's unclear whether data centers are willing to be flexible, but she noted that such ability to ramp and down in response to price signals - known as demand response - could help solve significant problems. Flexibility from data centers and other big electricity consumers, though, creates another issue: shifting costs for transmission projects to households and smaller businesses. This is because of a program launched about two decades ago that allows the state's chemical plants, refineries and even Bitcoin miners to reduce or eliminate millions of dollars of contributions for grid upgrades by throttling back their power usage during the highest demand periods of the summer months. Known as four coincident peaks, or 4CP, it was seen as a way to reduce stress on the grid during the hottest times of the year, when electricity is needed to run air conditioners. But this methodology for socializing costs is "just not right" as reliability risks have shifted, Texas Senator Charles Schwertner said in an interview at the event. A current Texas Senate bill is proposing to reform this. "We need to make sure the methodology respects all rate payers," Schwertner said.

Texas Needs Equivalent of 30 Reactors to Meet Data Center Power Demand

Demand on the Texas power grid is expected to expand so immensely that it would take the equivalent of adding 30 nuclear plants' worth of electricity by 2030 to meet the needs. That's according to the Electric Reliability Council of Texas, which manages the grid. The forecast is based on the addition of new data centers needed to power artificial intelligence. And it's raising concerns about whether infrastructure in the state will be able to expand fast enough -- and at what cost.