It's not clear from the article whether this is just datacenters -- or if that is just the convenient boogeyman.
The grid operator for the northeast, according to my Governor, has been well-behind in building out infrastructure. Of course new datacenters cause more load. But so do new houses (we're building as many as we can) and electric cars, etc.
It is not entirely wrong. Annual electricity consumption per capita in Maryland has been falling since 2005[0]. Unless a bunch of aluminum smelting plants have come online in the past 18 months, data centers do seem the appropriate root cause leading to a surge in demand.
There’s another chart on that page that shows regional demand for electricity. That seems to have flattened or dropped. Not sure how to explain that, in the context of data center demand.
Maybe I’m reading something wrong. Or maybe there is an anticipated increase in demand?
There is so much FUD going around SPECIFICALLY about data centers lately, that i’m dubious of anything i hear. it’s such a weird cultural phenomenon. Chronically online teenagers on Instagram making increasingly incorrect and absurd-sounding claims about water / energy usage. Comparatively barely anyone knew what a data center was 1-2 years ago.
The pitch for AI from its proponents is the destruction of all white collar and creative jobs, while simultaneously making all the content they consume worse and Internet socialization with human strangers replaced by doppelgangers? And you wonder why people are upset?
Somehow I don't see arguments comparing powering AI with producing food to go over well with them.
Many opponents to AI do not view the tech as having a net benefit. Comparing it to food production would serve to make you look more the fool to them despite their claims about water consumption frequently being wacky.
I am finding that 42% of California water is agriculture and 8% of that is for almonds. 3% of state water usage on a luxury nut might not be moving the needle that much, but it does feel wasteful for a state that is perpetually hovering on drought conditions.
Right; anti-data-center sentiment is really a way of attacking AI as a technology; arguments about the water or power use of data centers are just an excuse.
Well, to be fair, the public has been going through a multi-year forced beta-test of AI all while CEOs keep going on national television and posting on social media how there will be mass unemployment because of AI. To say nothing of all the companies that have (and soon will) close up shop due to increased prices from the global memory shortage unrelated to the proclaimed job-replacing benefits of AI.
And let's not forget many of the remaining independent websites on the Internet closing up shop due to being unable to afford the substantial increase in hosting costs resulting from aggressive scrapers getting data to keep training AI on.
Or the massive improvement in bots and click-fraud due to AI, pushing an increasing number of companies to embrace heinous practices such as mandatory facial recognition for users to be allowed to engage in socialization.
Or the increased electricity prices already realized around much of the country due to AI both so much of the existing grid's supply and requiring expensive upgrades to the infrastructure - the latter of which is frequently paid for by taxpayers.
All for the wondrous promises of unproven future capabilities.
The real mystery to me is how it's a mystery to so many people why there's a large and enduring anti-AI sentiment.
Yep. 10000 gallons per query, spews out toxic water, contaminates the water supply, uses more power than an entire state, and on and on. I'm convinced it's a psyop to prevent the US's progress in tech. It's so over the top crazy and obviously false, but everyone I know is falling for it.
They might be wrong on this one, but check the history on cancer alley, or the legalized massive PFAS dumping in rivers the world over, that has now polluted the earth so thoroughly you cannot escape going over the maximum recommended body serum. Same for microplastics.
It is absolutely justified to be extremely suspicious of big corporate. They've earned it.
It seems pretty easy to undermine the trust in the other side if you just pretend to be on it and inflate their numbers. See: Florida will be underwater by date X [in the past]
Legacy data centers were not representing a multiple of existing electricity demand. It is only recently that DCs are being built hoping to consume hundreds of MWs, up to GWs. Elsewhere in the thread is the Utah DC which will consume more electricity than the entire state.
Electricity demand growth in the country has been flat for the past twenty years. DCs are causing real strains to the grid which has not had to accommodate rapid growth.
Seeing a datacenter proposal in the news come in at 1.3GW was very sobering for me. I spent a lot of time in grad school on the campus of a large nuclear plant, and it turns out one nuclear core is good for about 0.9GW of electricity (or 2.9GW of heat).
A single site consuming more than the entire electrical output of a nuclear core, considering the sheer size and scale of that reactor and its supporting infrastructure and workforce, is just boggling to my mind. It's literally billions of dollars just to feed that one site, if they're being accurate in their proposal.
Understandable and justified are very different. I worry that unprincipled skepticism of big corporate makes it harder to stop the bad stuff; if every large project becomes a battle of corporate power vs. slopulist criticism, how do you sort through that to focus on the truly bad ones?
‘More power than an entire state’. Yep - take the Stratos data center project in Utah, the first phase of which is expected to consume 3GW and at full capacity is expected to be 9GW. By comparison, the entire state of Utah currently uses about 4GW.
For a less rural example, I am finding different numbers, but all of New York City is estimated at somewhere between 5-10GW. So, some 9 million people vs one data center.
That's a take. But let's stop and ask ourselves -- Cui bono?
Another take is that the same companies that are pushing for datacentres are often the same companies that control social media and traditional media outlets and are using this control to foster datacentres onto thee average person who is either wildly unenthusiastic about or at best ambivalent about.
It's all pretty moot anyways.
Big tech oligarchs have gotten pretty much everything they want over the years, it's not like the average person in bum-fuck nowhere is really going to be able to stop them from destroying their watersheds, poisoning their air and jacking up electrical prices.
I wouldn't get too upset about opposition to datacentres if I were you.
Money is King and the King has spoken.
There will be datacentres where ever the tech oligarchs want there isn't anything anyone can do about it.
Even in Texas' "disconnected" grid, we're seeing the same mess. Oncor is currently staring down a mind-boggling 350 GW in data center requests - to put that in perspective, that's more than triple ERCOT's entire peak demand. They’re now pivoting to a $47 billion infrastructure spree just to keep up, and they’ve already pushed through a $560 million rate hike to help foot the bill. It’s the same story as Maryland: no matter how the local market is structured, residential ratepayers are the ones getting squeezed to subsidize the massive high-voltage buildouts these AI projects require. One benefit: the increased human interaction pulls me away from the terminal. Door-to-door power salesmen now have a regular relationship with my Nest doorbell, warning me of the impending "AI-pocalypse" because ratepayers in Dallas are going to be the ones subsidizing the West Texas buildout.
It seems that big money can overrule local government regulators at will.
Here in Nevada, (Warran Buffet owned) NV Energy already has approval for a "Demand Charge" that will increase rates for everyone, and further reduce the ridiculously low amount of money that consumers get for selling their excess solar power back to the grid.
The regulators didn't even resist, but there has now been so much backlash that they're finally scheduling public hearings after the fact. The announcement doesn't even mention the Demand Charge by name, and many consumers aren't even aware they they're about to be screwed.
One of the more obscene things about this new charge is that people with PV arrays will pay a fee for demanding more power from their own grid-tied systems.
A lot of these rules happen at the regulatory level so lawmakers don't typically understand them in depth and get a lot of their explanations from utility lobbyists or the regulatory agency itself, if they even get involved or pay attention. The dramatic increases being directly linked to data centers is big enough for consumers to notice though.
That's why these independent counsels are pretty important such as the Maryland agency mentioned in this article. Since utilities at least on the distribution side are pretty much monopolies people have no choice but to pay the agreed rate.
> lawmakers don't typically understand them in depth and get a lot of their explanations from utility lobbyists or the regulatory agency itself, if they even get involved or pay attention.
I think you are being far too charitable here and in most cases it is weaponized ignorance at best.
Why dig into the minutia of the actual rules when you can just have the people donating money to you while benefiting from you not really fixing anything just tell you what you should do...?
Similar patterns occurred with telecom corporations and communities that setup their own internet services. In some states the community ISP service model was either shut down, or restricted from expanding further due to lobbying from large corporations.
The pressure onto normal citizens will push and increase renewable energy build out (E-Car, Balcony solar/roof solar), to get away from these companies faster. Their utility will increase further, the pressure increases even more.
But people like Elon Musk are also very ignorant: He populates going into space to fix the energy topic, but apparently can't do math because it would be a lot cheaper to use batteries and solar and potentially also sell the heat the DCs produce instead of doing any of it in space.
It would even be easier to just buy something in new mexico, building out the energy infrastructure in a non livable area because latency doesn't matter that much with AI (not all use cases, but for that you have edge locations).
The richest and smartest people (excluding here elon musk) are not able to do a fast proper buildout? ... They could even just build a whole town with DCs and combine this with other energy intensive industries and sharing the prorcess heat reuse.
It's not obscene it's economics - supply and demand.
In power grid dominated by solar production the value of MWh of electricity is highest at night (because the supply from solar is zero), the value MWh of electricity is lowest at noon (because the supply from solar is maximal). So the residential grid-tied PV system is supplying power when the value of electricity is low and consuming power when the value of electricity is high.
Better solution than fix rates are digital smart meters which calculate using variable rates from electricity market.
One could also argue that negative electricity prices at noon are "obscene".
It doesn't make economic sense to push for more solar in a grid dominated by solar without additional investments into electricity storage and these investments have to be paid by someone.
Rollout of digital smart meters for households makes sense, so that people can make use of cheap electricity at noon. Large customers of electricity already now buy electricity either on electricity market at variable raters or have specific long-term contracts with electricity suppliers.
As a YIMBYist who can't afford a house where I live, I actively want big money to overrule local government regulators at will, because big money developers make their big money by building houses and local regulators are responding to the NIMBYist concerns of ordinary homeowners that result in insufficient housing getting built. A local government regulator fighting for the interests of local homeowners does not necessarily do what is in my own long-term interest, and I don't necessarily want them to win against big money.
> Here in Nevada, (Warran Buffet owned) NV Energy already has approval for a "Demand Charge" that will increase rates for everyone, and further reduce the ridiculously low amount of money that consumers get for selling their excess solar power back to the grid.
Excess solar power generated by ordinary consumers is probably being priced correctly - excess solar power generation happens during the day when the sun is high, which means there's a glut of power because everyone with a solar panel generates a lot then. Solar power is scarcer and therefore more expensive when the sun is not shining bright, and this is not the time when customers are selling excess power back to the grid. Generous rates for buying power from customers were an effective subsidy to get people to install home solar panel systems, and that subsidy works less and less well as more and more power on the grid gets generated via solar panels and the difference in grid-wide power availability at different times based on the height of the sun becomes more and more important.
I don't think this is particularly due to the super-rich, over everyone else in society. A lot of the bad regulations I care most about are driven by ordinary people who own their own home and not a whole lot else, and are sincerely-supported by many people I know personally.
> Excess solar power generated by ordinary consumers is probably being priced correctly
Do you have any evidence for this position? Is this just regulations giving you bad vibes? I’m pretty sure everyone was quite aware the sun doesn’t shine at night whenever the previous rules and regulations were written. Your analysis isn’t breaking new ground.
> I’m pretty sure everyone was quite aware the sun doesn’t shine at night whenever the previous rules and regulations were written.
And because they knew, the regulations I've heard of set some sort of statutory price that consumers get. This is because it's been fairly likely from the start that if the price is set by the market with reference to the value of the electricity, consumers won't get anything. Because their contribution is largely worthless and occasionally value-destructive.
Demand for electricity is higher during the day. The previous rules were written when solar was a smaller part of the grid and "generates during the day" was an advantage.
As the amount of solar increases, the supply during the day goes up, so the daytime price starts going down. Meanwhile the highest demand period is just after sunset, so that's going to be when the price is highest because not only is that the highest demand, that's when solar generation is zero. And it's when people selling solar during the day are trying to buy power back. But now they're selling low and buying high.
> As a YIMBYist who can't afford a house where I live, I actively want big money to overrule local government regulators at will, because big money developers make their big money by building houses and local regulators are responding to the NIMBYist concerns of ordinary homeowners that result in insufficient housing getting built. A local government regulator fighting for the interests of local homeowners does not necessarily do what is in my own long-term interest, and I don't necessarily want them to win against big money.
I am A YIMBY too. But no, big money is not on your side. Big money wants to make money, not make your life better. It would like to build as much as possible for as little as possible, at the lowest quality possible, and sell it for an extremely high price. This isn't good for any of us.
>Big money wants to make money, not make your life better. It would like to build as much as possible for as little as possible, at the lowest quality possible, and sell it for an extremely high price. This isn't good for any of us.
Small money also wants to work as little as possible and sell it for an extremely high price. Selling maximal ROI is mostly a human thing. Also, there are “big money” developers building higher quality houses at higher prices, just like any other business.
Unless the graph explicitly states that it includes distributed behind-the-meter solar, then any dip in demand that looks like the inverse of solar is probably grid demand being replaced with local generation on homes and factory roofs or industrial land.
People regularly use the demand being supplied by solar to argue that solar isn't delivering when people need electricity.
The yearly peak grid demand in California is moving later in the day and later in the year due to this effect.
Ah, yes. California. Where large swathes of costal areas hover between 60ºF and 80ºF. We are talking about Nevada the weather of locality matters and where it can be supremely hot.
You posted the Texas grid, I posted the California grid. Here's the NW grid which includes Nevada. Same thing, demand peaks around 6PM when people get home and turn on their houses.
I'm not sure that follows as the biggest driver. 4 PM is nearly as high as as 6 PM. You would expect a big jump at 5 PM, but the biggest jump is from noon to 2 PM. Just looking at today's temperatures on my front porch in Reno, it was 93°F at 2 PM, it peaked at 95°F at 3:30 PM, and it didn't fall back down to 93°F until 5 PM. Some of that sustained power usage probably is people getting home, but a lot of it is A/C.
No, the chart you posted clearly shows that in Texas demand for power is highest at around 5-6pm, which is decidedly not when the sun is highest in the sky - it's when the sun is setting and the workday is ending but people are still active and doing things, many of which require electric power - perhaps more electric power than they would use during the workday depending on what the thing is. This is precisely the Duck Curve observation (https://en.wikipedia.org/wiki/Duck_curve) - which was originally coined with respect to the California electricity market but is applicable in many other markets.
A price signal that noon is a great time to do AI inference. Unfortunately, people often want AI inference done at other times than noon, when electricity isn't negatively-priced because of abundant solar panels making it in broad sunshine.
I am sometimes wondering wouldn't the most economic thing to be to geographically distribute AI computing. Latencies can be large, but power could be cheaper if the loads are just moved around the globe as needed. This would mean that hardware sits powered off or in very low power state for larger chunk of day, but maybe that is acceptable in some scenario.
It’s not clear to me that the demand charge will cause bills to increase at all and, on its face, it makes sense to charge separately for peak power consumption as well as total energy consumption.
As someone with a demand charge, let me disagree. The worst single hour out of 60-70 throughout the month is used and in my market it’s about $19/kw demand. Turn on the AC once during that period, $80. Happen to have to have an oven or microwave going at the same time, you’re probably over $100. For one hour on one day of the month. Once you screw your month, you’re free to do it the rest of the month, but it only takes once.
What you have described is an obviously terrible system that doesn’t incentivize lower power consumption.
That’s not how it’s going to work in Nevada. It will be the highest 15 minute period of each day, so if you spread out your power usage you have room to game the rates and save money. And if you have a bad day it will only cost you a dollar or two and the next day is fresh.
Plus it’s not on top of the total consumption. The consumption rate is getting cut so that people should be paying roughly the same amount as before.
> What you have described is an obviously terrible system that doesn’t incentivize lower power consumption.
Doesn't it? Suppose you have a battery system which has access to the current price, so it charges when it's cheap and discharges when it's expensive. Then you don't pay the $19/kWh, you run on batteries then -- or sell at $19/kWh. And thereby turn a profit from installing the battery system, creating the incentive to reduce consumption when the price is high.
Friend of mine used to work in that space. He said there were people who were trying to do their job making sure the rate payers interests were being looked after. And people whose only interest was sucking up to the utilities in hope that they'll be rewarded by an offer to switch sides.
I am curious how electricity is priced. Why are more and more utility providers charge based on ‘infrastructure cost’ or ‘fixed platform fee’ instead of usage fee?
Within the US, energy prices for are typically split into supply and distribution rates with taxes and fees added to each of these. There are typically a large number of these fees that are passed through to the consumer, but just are bundled together to reduce confusion. An example fee is one for keeping power plants idle as extra capacity for when it's needed. Electricity has a nationwide market with different prices for spot prices vs long term although if you are big enough you can also get a direct contract to hedge your energy supply prices.
The complaint here is that PJM is spending money on upgrading the long range wires and passing that fee in a way that's not calculated for usage but instead it's likely divided evenly amongst member states. If you're upgrading wires in PA why should Maryland pay for that? These would taking in new/higher fees being passed to consumers.
The long range transmission lines are different than short term transmission lines. The long range ones appear someone to hit electricity from a power plant in California for a business in Baltimore.
And the counterpoint is that for the resident of Maryland, paying a little now to upgrade long distance transmission lines will save them money in the long run, because it will allow them to benefit from cheap solar power from California in the evenings and cheap solar from new York in the mornings.
More transmission = more places to find lower prices.
> Why are more and more utility providers charge based on ‘infrastructure cost’ or ‘fixed platform fee’ instead of usage fee?
Because unlike many commodities, electricity, once generated, is hard to store, yet supply must match demand in real time. You need to meet peak demand, even if normal usage is not as high. If you pay purely for usage, that might not send enough price signals to ensure that you have the necessary capacity when you need it. https://www.canarymedia.com/articles/enn/explainer-how-capac... has a more detailed overview of how markets are being structured to provide capacity, separate from actual generation.
Hmmm, if you take a brick and mortar store, they have fixed costs to renovate and decorate the store, and they likely have capacity of the store that is not used during non-peak period as well. They charge for item sold, to cover for all costs they incurred for capacity of the store even during non-peak period as well. Is this an equivalent comparison? Don’t businesses generally roll in the fixed costs into their price and charge per unit still?
> I am curious how electricity is priced. Why are more and more utility providers charge based on ‘infrastructure cost’ or ‘fixed platform fee’ instead of usage fee?
This is also happening in Australia. I wonder if it is a similar story in the US, or not.
In Australia, rooftop solar and batteries have become so widespread, many properties have dramatically reduced their consumption of power from the grid. This poses a problem when electricity usage costs are used, not just to cover the power consumed, but also the grid infrastructure, much of which are fixed costs which are incurred irrespective of actual usage. In response, the regulator is looking at changing the billing structure to increase the fixed part of the bill which you pay irrespective of how much power you use.
What happens (in Australia and in California) if rooftop solar and battery technology really have a huge breakthrough and the capacity of the major power generators were never utilized in the lifetime of those generators? Do consumers just ‘bail out’ the power generation companies?
That's mostly incorrect. In Maryland, like in most places in the country, the distribution infrastructure is controlled by regulated monopolies that buy power on the market from generators. Your bills separate out the fees for usage and the fees for distribution, and the Maryland PSC has to approve both.
Yes, but the cost per kilowatt is at least partially based on capex recovery. That might be approved by the PSC but what they approve are capex projects and the recovery of them.
Thank you for sharing this.
I get that the company making the capital investment wants to get a return of 10% from their investment.
The part I don’t understand is, why aren’t the return on investment being covered by the increased usage from the data centers (while the rate per usage stays flat)?
If the increase in usage (with rates staying flat) is insufficient to cover for the return on investment, then who is making the decision to take the risk for making these capital investment? The risk taker can definitely ‘pay’ for an over confidence in the market.
If it is because the increased usage of the grid as a whole reaches a step function requiring more investment, the system can have a gradually increasing usage price rate.
I am trying to find out if someone in the system is trying to eat up the benefits and publicly say “it’s because of AI” or maybe I am not understanding the situation well.
1) the first MW is cheaper to generate than the 100th. Newer plants. Cheaper fuels. More efficient. You run your good stuff always, for peak it’s on demand.
2) the cost of the old plants are already paid for, if adding a new data center requires a new plant; may add a big cost with a 50 year payback.
They basically are. It really isn’t anything resembling an open market. They are effectively extensions of the state that happen to be funded by user fees rather than general funds.
Because there's this belief that a for-profit company will naturally be more efficient. No idea if that's actually true in practice though. Or if efficiency > the profits the company takes.
I don't know of any large community ran utilities, just small ones. I'm guessing the scale starts being a problem eventually.
They can be efficient, but I ly if the incentives align towards the desired definition of efficiency.
If you give a company a natural monopoly and protection from competition. Then it's most efficient way to make money is just to raise rates
I'm not familiar with the Maryland power grid, but I've observed in other places that putting data centers in places with older / inadequate grids can / will require upgrades to handle the new load.
Then they go bust, and competitors who priced this in and have a better financing model end up the winners who take the market. Thought that was the free market capitalism that the US prided itself on?
I've been saying this is going to be _the_ biggest political issue of the upcoming midterms and then the 2028 election. High electricity prices are something that really whacks the middle class, there's an easy bogeyman to hate here (AI and datacentres, neither of which are popular), and it crosses partisan lines.
I wrote a multi-page essay about this for our condo association last year. There's lots of complexity and externalities here — Pepco grid modernization, PJM interconnection cap auctions, AI buildouts in NOVA, etc; it's a really complicated issue.
Varies on the project. As someone dealing with this locally, it varies how the project got approved. Almost all the approval is at local level, sometimes at state level. Feds getting involve is pretty rare.
A) Sometimes, it's existing datacenter that repurposed from "normal" datacenter to AI datacenter with power consumption skyrocketing. There generally is not a ton of approval in this case or power company came by asking for additional infrastructure approval and who the hell denies that.
B) Some areas classed datacenters as "industrial" use so they could be built without a ton of preapproval. Most counties have closed that loophole but existing permits may allow additional datacenters to be built.
C) Local officials approving things over desire of the voters. Alot of people don't pay attention to their local politicians despite them having most impact on their day-to-day life. Therefore, you end up with local politicians who will believe whatever they are told along with just plain overall corruption. Most of it legal.
Also, as someone who used to live in Capital Region, National Politics can suck out all oxygen in the room so local officials are even less likely monitored.
The industrial use also often comes with fantastically low rates as well.
Virginia finally started saying folks using >25MW need to pay something more than the incredibly cheap rates they had been given. But generally data centers have often gottem marked as industrial, and it's been incredibly fantastically advantageous to do so.
Apparently not. Maryland residents didn’t sign any of these agreements in other states. Nor did their elected representatives. They were just presented with the bill to support the infrastructure in the other states because, you know, they’re so cool. And it doesn’t get any closer to the beltway than Maryland.
What’s crazy is the utility company admits that the infrastructure is for the growth in the other states. They admit Maryland won’t grow as fast. They concede Maryland needs less infrastructure. But still saddled Maryland residents with the extra bills for out of state data centers?
I mean, at least say it’s for Maryland. Just to make it look good? I don’t know? Make some kind of attempt to make it palatable.
I’m wondering if it’s just easier to pass the cost on to people in Maryland than it is in other states? Like is the regulatory environment with respect to this kind of thing more lax or something?
There has to be some kind of explanation. Because on the face of it, this just doesn’t look good. It makes ai and tech industry just seem like robber barons. And tech guys don’t need that right now.
One of Ohio's bigger utilities (AEP) recently just got a new tariff passed with the PUCO that required big electric users (i.e., datacentres) to actually commit with hard money when they said they expected some large increase in demand.
The amount of power datacentres said they were going to use dropped significantly - well over half. So now the utility has far less it has to worry about in big time transmissions build outs.
All from making the people claiming they needed it put a modest amount of money forward. They have to pay $100k (for a 100-MW project) to do a load study. Then they have to agree that they will pay for the electricity they claim they're going to use, even if they end up not using it (i.e., the data centre doesn't get built out and they end up using 0.)
If their credit rating is not strong enough, they have to pledge security or else put up the money.
A lot of data centre operators wouldn't cough up the $10k or $100k needed for the load study. Everything got a lot easier.
Excellent move, and I am surprised it was effective at such a low annoyance price.
The rumor is that many of the data centers have been shopping around in different utility markets, trying to assess where they could get the best/fastest build out. However, they are never informing the utility of sites which they will not develop. So some of these massive data centers may be getting double or triply counted for electricity demand projections.
these out of state AI companies are fairly quickly going to realize that their lobbying for the CURRENT administration doesnt mean shit after the next election.
they're going to have to learn to be a lot more thoughtful about the seething masses (that their products are forcing them to lose jobs to)...
We've been here before [1]. In that case, extra load on the grid meant the municipality needed to purchase more power (at higher prices), which raised everybody's prices.
Electricity supply is highly regulated. Prices for electricity are constrained and often set by state regulators. These are so-called "usage fees". But beyond that the utility is allowed to charge customers for infrastructure and transmissio and those fees are out of control. We recently had a court case where a North Carolina utility illegally overcharged customers but the judge didn't assign damages because legally the utility could just charge customers for those damages [2]. And the legislature passed laws to protect the utility as well.
This is going to get worse too because private equity is rapidly moving into this market and they know that capex can be entirely pushed onto customers with no recourse.
So the data centers tend to get sweetheart deals on electricity too. So while the total cost of electricity has gone up (per Mwh), they pay less pushing even more burden onto everyone else. Plus they get discounts on property taxes, energy tariffs and other taxes, as in the case of Kevin O'Leary's mega-DC in Utah.
But this state interconnect bill is another level of evil because it's pushing the costs onto states that have nothing to do with the data center and won't get any "benefit" (there is no benefit) anyway.
What we need are laws that make these projects pay for their own infrastructure. This might cause them to build near power sources. Great. Away from people, mostly.
The level of regulatory corruption here is actually sickening. Take Elon's Grok DC in Memphis that exploits local laws against clean air by using "mobile" gas turbines in the city of Memphis.
This is the craziest part. We've long had publicly subsidized private projects, or corporate tax breaks given to entities with the fig leaf explanation that the projects will bring economic activity, or jobs, or some sort of long lasting, durable benefit, or even at its most craven, keep a stupid populace happy that their favorite sportsball team hasn't left their town.
Datacenters do none of these things. They don't bring any true employment numbers to make a difference. They don't materially improve their surroundings. They don't increase land value. They aren't an attractive neighbor. They don't benefit the tax base, not least of all when you're doling out massive tax breaks and deferments... no one _wants_ them, so it's not even like this is a "well, you're just not a Buffalo Bills fan, but the rest of us are, get on board!" situation.
There is zero net benefit to the citizens in these places to welcome these facilities to their town. Shorter latency to their chatbot of choice, maybe? But in any practical, moral hazard sense, these are all pure net negatives for the communities, and it's wild that these leaders think they're some sort of marquee, glamorous, prestigious win of a project.
Compare this with other, things-that-rhyme-but-aren't-the-same projects, like the TSMC fabs in Phoenix: these projects are bringing a ton of high-paying, new jobs (and, somewhat controversially, an expat community from Taiwan to help onboard them in the meantime), but they're also delivering in other economic terms because of the supply chain's knock-on effects: the TSMC fabs further the reputation of Phoenix as the Silicon Desert that Intel, OnSemi, Microchip, and Motorola had long been working towards, but at a much more amplified scale, and in a truly meaningful capacity. The money being spent here is staying here, and driving some real practical benefits. But even still, it's an open conversation around how careful we need to be with the water usage of these fabs (though TSMC is aiming towards 90%+ recapture in the next few years, I think it's ~60% right now), and other considerations... they are still, on balance, bringing 6,000-12,000 direct jobs, and even more indirect jobs as they continue to expand.
These datacenter projects don't even do _that_ well. They're just upsetting the power grid and creating unfortunate microclimates for the immediate vicinity for a handful of NOC jobs. (And some itinerant construction and engineering jobs.)
Can someone explain to me why local governments are so against datacenters? It seems like a golden opportunity to build electric infrastructure that's paid for by corporations and if AI is a bubble at least that infrastructure will remain and continue to provide cheap power.
Existing power infra is likely fine enough for current demands. And building new infra doesn't necessarily mean it will be any cheaper to operate or use. So with datacentres providing rather little local economic activity after being build and potential impact on electricity costs say during night overall they are not that beneficial.
If your town users a peak of say 100MW and is powered by two 50MW feeds
Then a new DC creates another 300MW of demand and builds 300MW more feeds
Then the DC goes bust, you're left with 350MW of potential supply and 50MW of demand
Compare with a highway, you had a 2 lane road, and it was fine, with 1000 cars an hour, then someone expanded it to 8 lanes and filled them with another 3000 cars an hour.
Then they vanished, and you're left with an 8 lane road for 1000 cars an hour, paying 4 times the maintenance for extra unneeded capacity.
You're kidding yourself if you think people are laying down in front of bulldozers out of concern for trivial maintenance costs on under-utilized grid capacity.
Fear of change due to AI, masquerading as concern for the one thing about technological progress that a local city council has the power to obstruct: building physical buildings (classic NIMBY-ism).
Basically every AI company using "catastrophizing" and "ragebait" as their marketing strategy is working so well that normies are afraid they're going to lose their cushy do-nothing desk jobs. Hence the braindead/conspiracy narratives that data centers are going to drink all the fresh water, give your kids cancer, kill the plants and quadruple your electric bill.
What's most hilarious about this; dramatically expanding the power grid is absolutely necessary to get off of fossil fuels, yet the same people who used to scream about climate change are now trying to block grid upgrades paid for by data centers. With zero awareness of the irony.
This will only get worse as time goes on because first world countries are aging at increasing rates. Old people hate change. They're deficit spending their children's future labor while obstructing the creation of anything productive that might dig us out of the hole they put us in.
Seems people have the choice between power outtages and getting pollution by the untreated exhausts of small gas turbine that are running on the premises of AI data centers. It's horrible for humans.
Humans are so annoying, can't they move away from data centers?/s
I'll be the first to complain about Texas being on its own energy grid and the dumpster fire of resultant things that happen because of it, but it is worthwhile to call out that this sort of thing is not possible in Texas because of that.
It's not clear from the article whether this is just datacenters -- or if that is just the convenient boogeyman.
The grid operator for the northeast, according to my Governor, has been well-behind in building out infrastructure. Of course new datacenters cause more load. But so do new houses (we're building as many as we can) and electric cars, etc.
It is not entirely wrong. Annual electricity consumption per capita in Maryland has been falling since 2005[0]. Unless a bunch of aluminum smelting plants have come online in the past 18 months, data centers do seem the appropriate root cause leading to a surge in demand.
[0] https://www.eia.gov/states/MD/data/dashboard/electricity cannot drop a direct link, but you can expand the "Total electricity consumption per capita, annual" chart
There’s another chart on that page that shows regional demand for electricity. That seems to have flattened or dropped. Not sure how to explain that, in the context of data center demand.
Maybe I’m reading something wrong. Or maybe there is an anticipated increase in demand?
The only regional chart I see on that page is at hourly resolution.
Electricity usage in N.America / Europe has been static for the last ~20 years.
Thank you Mr. American but wrong
There is so much FUD going around SPECIFICALLY about data centers lately, that i’m dubious of anything i hear. it’s such a weird cultural phenomenon. Chronically online teenagers on Instagram making increasingly incorrect and absurd-sounding claims about water / energy usage. Comparatively barely anyone knew what a data center was 1-2 years ago.
The pitch for AI from its proponents is the destruction of all white collar and creative jobs, while simultaneously making all the content they consume worse and Internet socialization with human strangers replaced by doppelgangers? And you wonder why people are upset?
They're chronically online because millennials basically shoved digital heroin into their face from birth
I like the number of times I heard: “they’re going to be so good at computers!”.
I can not imagine getting my children a straight access to internet or a phone or allowing them on social media until after 16.
Would you believe NERC?
https://www.nerc.com/newsroom/nerc-issues-level-3-alert-reli...
It's not weird at all. Go outside.
> increasingly incorrect and absurd-sounding claims about water
Wait till they hear about big Ag and how they use, abuse and ‘pay’ for water, while farming deserts.
Somehow I don't see arguments comparing powering AI with producing food to go over well with them.
Many opponents to AI do not view the tech as having a net benefit. Comparing it to food production would serve to make you look more the fool to them despite their claims about water consumption frequently being wacky.
Like all food production has equal merit. Growing almonds in the desert is national food security obviously.
Since this is HN let's be factually correct. Almond production is irrelevant in water usage. The bulk of it is going to animal agriculture.
I am finding that 42% of California water is agriculture and 8% of that is for almonds. 3% of state water usage on a luxury nut might not be moving the needle that much, but it does feel wasteful for a state that is perpetually hovering on drought conditions.
Much of that water comes out of a collapsing acquifer.
Right; anti-data-center sentiment is really a way of attacking AI as a technology; arguments about the water or power use of data centers are just an excuse.
Well, to be fair, the public has been going through a multi-year forced beta-test of AI all while CEOs keep going on national television and posting on social media how there will be mass unemployment because of AI. To say nothing of all the companies that have (and soon will) close up shop due to increased prices from the global memory shortage unrelated to the proclaimed job-replacing benefits of AI.
And let's not forget many of the remaining independent websites on the Internet closing up shop due to being unable to afford the substantial increase in hosting costs resulting from aggressive scrapers getting data to keep training AI on.
Or the massive improvement in bots and click-fraud due to AI, pushing an increasing number of companies to embrace heinous practices such as mandatory facial recognition for users to be allowed to engage in socialization.
Or the increased electricity prices already realized around much of the country due to AI both so much of the existing grid's supply and requiring expensive upgrades to the infrastructure - the latter of which is frequently paid for by taxpayers.
All for the wondrous promises of unproven future capabilities.
The real mystery to me is how it's a mystery to so many people why there's a large and enduring anti-AI sentiment.
Plenty of alfalfa and corn aren't going to food production. And much of those the remaining are not efficient.
https://youtu.be/XusyNT_k-1c
Everyone should find a comparison to food - which people need to live - as stupid?
Yep. 10000 gallons per query, spews out toxic water, contaminates the water supply, uses more power than an entire state, and on and on. I'm convinced it's a psyop to prevent the US's progress in tech. It's so over the top crazy and obviously false, but everyone I know is falling for it.
They might be wrong on this one, but check the history on cancer alley, or the legalized massive PFAS dumping in rivers the world over, that has now polluted the earth so thoroughly you cannot escape going over the maximum recommended body serum. Same for microplastics.
It is absolutely justified to be extremely suspicious of big corporate. They've earned it.
Suspicion and making up claims are separate ideas. You can be suspicious without polluting the internet with junk information.
It seems pretty easy to undermine the trust in the other side if you just pretend to be on it and inflate their numbers. See: Florida will be underwater by date X [in the past]
But datcenters have been around for decades now. That's what makes it so insane.
Around me people are rioting about the construction approval of a new DC, it has all the insane FUD on social media flying around about it.
...and yet there are already 24 datacenters in the area, with the oldest ones running since the early '00s
Legacy data centers were not representing a multiple of existing electricity demand. It is only recently that DCs are being built hoping to consume hundreds of MWs, up to GWs. Elsewhere in the thread is the Utah DC which will consume more electricity than the entire state.
Electricity demand growth in the country has been flat for the past twenty years. DCs are causing real strains to the grid which has not had to accommodate rapid growth.
Seeing a datacenter proposal in the news come in at 1.3GW was very sobering for me. I spent a lot of time in grad school on the campus of a large nuclear plant, and it turns out one nuclear core is good for about 0.9GW of electricity (or 2.9GW of heat).
A single site consuming more than the entire electrical output of a nuclear core, considering the sheer size and scale of that reactor and its supporting infrastructure and workforce, is just boggling to my mind. It's literally billions of dollars just to feed that one site, if they're being accurate in their proposal.
>Electricity demand growth in the country has been flat for the past twenty years.
Interesting considering the similar outcry about bitcoin mining.
Understandable and justified are very different. I worry that unprincipled skepticism of big corporate makes it harder to stop the bad stuff; if every large project becomes a battle of corporate power vs. slopulist criticism, how do you sort through that to focus on the truly bad ones?
‘More power than an entire state’. Yep - take the Stratos data center project in Utah, the first phase of which is expected to consume 3GW and at full capacity is expected to be 9GW. By comparison, the entire state of Utah currently uses about 4GW.
For a less rural example, I am finding different numbers, but all of New York City is estimated at somewhere between 5-10GW. So, some 9 million people vs one data center.
3GW per what? Hour? Year? Minute?
Watt is Joule/second
3 gigajoule per second. It already has a unit of time.
3GW/9GW is peak load, as I understand it - data centres usually operate at 85-90% of peak load according to Goldman Sachs.
Meanwhile, the 4GW figure is average demand - Utah consumed 35,075GWh for 2025, so average demand of 4GW (35075/(365*24)).
3GWh/h.
Common parlance is "own goal"
That's a take. But let's stop and ask ourselves -- Cui bono?
Another take is that the same companies that are pushing for datacentres are often the same companies that control social media and traditional media outlets and are using this control to foster datacentres onto thee average person who is either wildly unenthusiastic about or at best ambivalent about.
It's all pretty moot anyways.
Big tech oligarchs have gotten pretty much everything they want over the years, it's not like the average person in bum-fuck nowhere is really going to be able to stop them from destroying their watersheds, poisoning their air and jacking up electrical prices.
I wouldn't get too upset about opposition to datacentres if I were you.
Money is King and the King has spoken.
There will be datacentres where ever the tech oligarchs want there isn't anything anyone can do about it.
Even in Texas' "disconnected" grid, we're seeing the same mess. Oncor is currently staring down a mind-boggling 350 GW in data center requests - to put that in perspective, that's more than triple ERCOT's entire peak demand. They’re now pivoting to a $47 billion infrastructure spree just to keep up, and they’ve already pushed through a $560 million rate hike to help foot the bill. It’s the same story as Maryland: no matter how the local market is structured, residential ratepayers are the ones getting squeezed to subsidize the massive high-voltage buildouts these AI projects require. One benefit: the increased human interaction pulls me away from the terminal. Door-to-door power salesmen now have a regular relationship with my Nest doorbell, warning me of the impending "AI-pocalypse" because ratepayers in Dallas are going to be the ones subsidizing the West Texas buildout.
Why “even” in Texas? I would say “even outside of Texas” is more appropriate.
It seems that big money can overrule local government regulators at will.
Here in Nevada, (Warran Buffet owned) NV Energy already has approval for a "Demand Charge" that will increase rates for everyone, and further reduce the ridiculously low amount of money that consumers get for selling their excess solar power back to the grid.
The regulators didn't even resist, but there has now been so much backlash that they're finally scheduling public hearings after the fact. The announcement doesn't even mention the Demand Charge by name, and many consumers aren't even aware they they're about to be screwed.
One of the more obscene things about this new charge is that people with PV arrays will pay a fee for demanding more power from their own grid-tied systems.
https://www.nvenergy.com/publish/content/dam/nvenergy/bill_i...
A lot of these rules happen at the regulatory level so lawmakers don't typically understand them in depth and get a lot of their explanations from utility lobbyists or the regulatory agency itself, if they even get involved or pay attention. The dramatic increases being directly linked to data centers is big enough for consumers to notice though.
That's why these independent counsels are pretty important such as the Maryland agency mentioned in this article. Since utilities at least on the distribution side are pretty much monopolies people have no choice but to pay the agreed rate.
> lawmakers don't typically understand them in depth and get a lot of their explanations from utility lobbyists or the regulatory agency itself, if they even get involved or pay attention.
I think you are being far too charitable here and in most cases it is weaponized ignorance at best.
Why dig into the minutia of the actual rules when you can just have the people donating money to you while benefiting from you not really fixing anything just tell you what you should do...?
Similar patterns occurred with telecom corporations and communities that setup their own internet services. In some states the community ISP service model was either shut down, or restricted from expanding further due to lobbying from large corporations.
They are killing themselves with this ignorance.
The pressure onto normal citizens will push and increase renewable energy build out (E-Car, Balcony solar/roof solar), to get away from these companies faster. Their utility will increase further, the pressure increases even more.
But people like Elon Musk are also very ignorant: He populates going into space to fix the energy topic, but apparently can't do math because it would be a lot cheaper to use batteries and solar and potentially also sell the heat the DCs produce instead of doing any of it in space.
It would even be easier to just buy something in new mexico, building out the energy infrastructure in a non livable area because latency doesn't matter that much with AI (not all use cases, but for that you have edge locations).
The richest and smartest people (excluding here elon musk) are not able to do a fast proper buildout? ... They could even just build a whole town with DCs and combine this with other energy intensive industries and sharing the prorcess heat reuse.
It's not obscene it's economics - supply and demand.
In power grid dominated by solar production the value of MWh of electricity is highest at night (because the supply from solar is zero), the value MWh of electricity is lowest at noon (because the supply from solar is maximal). So the residential grid-tied PV system is supplying power when the value of electricity is low and consuming power when the value of electricity is high.
Better solution than fix rates are digital smart meters which calculate using variable rates from electricity market.
Yes it’s economics, but that doesn’t exempt it from being “obscene” if that is how one sees it.
One could also argue that negative electricity prices at noon are "obscene".
It doesn't make economic sense to push for more solar in a grid dominated by solar without additional investments into electricity storage and these investments have to be paid by someone.
Rollout of digital smart meters for households makes sense, so that people can make use of cheap electricity at noon. Large customers of electricity already now buy electricity either on electricity market at variable raters or have specific long-term contracts with electricity suppliers.
As a YIMBYist who can't afford a house where I live, I actively want big money to overrule local government regulators at will, because big money developers make their big money by building houses and local regulators are responding to the NIMBYist concerns of ordinary homeowners that result in insufficient housing getting built. A local government regulator fighting for the interests of local homeowners does not necessarily do what is in my own long-term interest, and I don't necessarily want them to win against big money.
> Here in Nevada, (Warran Buffet owned) NV Energy already has approval for a "Demand Charge" that will increase rates for everyone, and further reduce the ridiculously low amount of money that consumers get for selling their excess solar power back to the grid.
Excess solar power generated by ordinary consumers is probably being priced correctly - excess solar power generation happens during the day when the sun is high, which means there's a glut of power because everyone with a solar panel generates a lot then. Solar power is scarcer and therefore more expensive when the sun is not shining bright, and this is not the time when customers are selling excess power back to the grid. Generous rates for buying power from customers were an effective subsidy to get people to install home solar panel systems, and that subsidy works less and less well as more and more power on the grid gets generated via solar panels and the difference in grid-wide power availability at different times based on the height of the sun becomes more and more important.
There's 'big money' and, there's also "BIG MONEY". Former doesn't always win against the government, the latter pretty much overrules anything.
The super riches are already winning so many times. The US is missing regulations, and at the same time over-regulate areas that it should not.
I don't think this is particularly due to the super-rich, over everyone else in society. A lot of the bad regulations I care most about are driven by ordinary people who own their own home and not a whole lot else, and are sincerely-supported by many people I know personally.
> Excess solar power generated by ordinary consumers is probably being priced correctly
Do you have any evidence for this position? Is this just regulations giving you bad vibes? I’m pretty sure everyone was quite aware the sun doesn’t shine at night whenever the previous rules and regulations were written. Your analysis isn’t breaking new ground.
> I’m pretty sure everyone was quite aware the sun doesn’t shine at night whenever the previous rules and regulations were written.
And because they knew, the regulations I've heard of set some sort of statutory price that consumers get. This is because it's been fairly likely from the start that if the price is set by the market with reference to the value of the electricity, consumers won't get anything. Because their contribution is largely worthless and occasionally value-destructive.
Demand for electricity is higher during the day. The previous rules were written when solar was a smaller part of the grid and "generates during the day" was an advantage.
As the amount of solar increases, the supply during the day goes up, so the daytime price starts going down. Meanwhile the highest demand period is just after sunset, so that's going to be when the price is highest because not only is that the highest demand, that's when solar generation is zero. And it's when people selling solar during the day are trying to buy power back. But now they're selling low and buying high.
> As a YIMBYist who can't afford a house where I live, I actively want big money to overrule local government regulators at will, because big money developers make their big money by building houses and local regulators are responding to the NIMBYist concerns of ordinary homeowners that result in insufficient housing getting built. A local government regulator fighting for the interests of local homeowners does not necessarily do what is in my own long-term interest, and I don't necessarily want them to win against big money.
I am A YIMBY too. But no, big money is not on your side. Big money wants to make money, not make your life better. It would like to build as much as possible for as little as possible, at the lowest quality possible, and sell it for an extremely high price. This isn't good for any of us.
>Big money wants to make money, not make your life better. It would like to build as much as possible for as little as possible, at the lowest quality possible, and sell it for an extremely high price. This isn't good for any of us.
Small money also wants to work as little as possible and sell it for an extremely high price. Selling maximal ROI is mostly a human thing. Also, there are “big money” developers building higher quality houses at higher prices, just like any other business.
Hey bud, do you happen to know when the demand for power is the highest? It happens to be.... gasp.... when the sun is highest in the sky.
Just take a look at ERCOT's website: https://www.ercot.com/gridmktinfo/dashboards/supplyanddemand
That's just not true. Here's the California grid from yesterday: https://www.gridstatus.io/live/caiso?date=2026-05-09
Peak demand is 6 PM when everyone gets home from work and turns on the air conditioning.
EDIT: Your chart shows the same thing? Demand is highest at 6 pm, not noon.
Unless the graph explicitly states that it includes distributed behind-the-meter solar, then any dip in demand that looks like the inverse of solar is probably grid demand being replaced with local generation on homes and factory roofs or industrial land.
People regularly use the demand being supplied by solar to argue that solar isn't delivering when people need electricity.
The yearly peak grid demand in California is moving later in the day and later in the year due to this effect.
Ah, yes. California. Where large swathes of costal areas hover between 60ºF and 80ºF. We are talking about Nevada the weather of locality matters and where it can be supremely hot.
You posted the Texas grid, I posted the California grid. Here's the NW grid which includes Nevada. Same thing, demand peaks around 6PM when people get home and turn on their houses.
https://www.eia.gov/electricity/gridmonitor/expanded-view/el...
I'm not sure that follows as the biggest driver. 4 PM is nearly as high as as 6 PM. You would expect a big jump at 5 PM, but the biggest jump is from noon to 2 PM. Just looking at today's temperatures on my front porch in Reno, it was 93°F at 2 PM, it peaked at 95°F at 3:30 PM, and it didn't fall back down to 93°F until 5 PM. Some of that sustained power usage probably is people getting home, but a lot of it is A/C.
In France there are 2 peaks in a working day, one around 12:00-13:00, and one around 19:00. On weekends there's a third peak around 22:00-23:00.
https://www.rte-france.com/en/data-publications/eco2mix/elec...
No, the chart you posted clearly shows that in Texas demand for power is highest at around 5-6pm, which is decidedly not when the sun is highest in the sky - it's when the sun is setting and the workday is ending but people are still active and doing things, many of which require electric power - perhaps more electric power than they would use during the workday depending on what the thing is. This is precisely the Duck Curve observation (https://en.wikipedia.org/wiki/Duck_curve) - which was originally coined with respect to the California electricity market but is applicable in many other markets.
Typical: YIMBY that does not own a back yard. Makes it just another YIYBY.
> further reduce the ridiculously low amount of money that consumers get for selling their excess solar power back to the grid.
Batteries are cheaper every week.
Time to build kWh Victory gardens.
In Germany its getting insane right now. A lot of the time energy at noon is negative. https://blog.stromflix.com/price-of-power
A price signal that noon is a great time to do AI inference. Unfortunately, people often want AI inference done at other times than noon, when electricity isn't negatively-priced because of abundant solar panels making it in broad sunshine.
I am sometimes wondering wouldn't the most economic thing to be to geographically distribute AI computing. Latencies can be large, but power could be cheaper if the loads are just moved around the globe as needed. This would mean that hardware sits powered off or in very low power state for larger chunk of day, but maybe that is acceptable in some scenario.
I think a Powerwall is in my future...
It’s not clear to me that the demand charge will cause bills to increase at all and, on its face, it makes sense to charge separately for peak power consumption as well as total energy consumption.
As someone with a demand charge, let me disagree. The worst single hour out of 60-70 throughout the month is used and in my market it’s about $19/kw demand. Turn on the AC once during that period, $80. Happen to have to have an oven or microwave going at the same time, you’re probably over $100. For one hour on one day of the month. Once you screw your month, you’re free to do it the rest of the month, but it only takes once.
What you have described is an obviously terrible system that doesn’t incentivize lower power consumption.
That’s not how it’s going to work in Nevada. It will be the highest 15 minute period of each day, so if you spread out your power usage you have room to game the rates and save money. And if you have a bad day it will only cost you a dollar or two and the next day is fresh.
Plus it’s not on top of the total consumption. The consumption rate is getting cut so that people should be paying roughly the same amount as before.
> What you have described is an obviously terrible system that doesn’t incentivize lower power consumption.
Doesn't it? Suppose you have a battery system which has access to the current price, so it charges when it's cheap and discharges when it's expensive. Then you don't pay the $19/kWh, you run on batteries then -- or sell at $19/kWh. And thereby turn a profit from installing the battery system, creating the incentive to reduce consumption when the price is high.
Friend of mine used to work in that space. He said there were people who were trying to do their job making sure the rate payers interests were being looked after. And people whose only interest was sucking up to the utilities in hope that they'll be rewarded by an offer to switch sides.
One more reason to go off grid
The good thing about democracy is that you get screwed anyway and then you are made to feel like it was your fault.
I am curious how electricity is priced. Why are more and more utility providers charge based on ‘infrastructure cost’ or ‘fixed platform fee’ instead of usage fee?
Within the US, energy prices for are typically split into supply and distribution rates with taxes and fees added to each of these. There are typically a large number of these fees that are passed through to the consumer, but just are bundled together to reduce confusion. An example fee is one for keeping power plants idle as extra capacity for when it's needed. Electricity has a nationwide market with different prices for spot prices vs long term although if you are big enough you can also get a direct contract to hedge your energy supply prices.
The complaint here is that PJM is spending money on upgrading the long range wires and passing that fee in a way that's not calculated for usage but instead it's likely divided evenly amongst member states. If you're upgrading wires in PA why should Maryland pay for that? These would taking in new/higher fees being passed to consumers.
The long range transmission lines are different than short term transmission lines. The long range ones appear someone to hit electricity from a power plant in California for a business in Baltimore.
And the counterpoint is that for the resident of Maryland, paying a little now to upgrade long distance transmission lines will save them money in the long run, because it will allow them to benefit from cheap solar power from California in the evenings and cheap solar from new York in the mornings.
More transmission = more places to find lower prices.
> Why are more and more utility providers charge based on ‘infrastructure cost’ or ‘fixed platform fee’ instead of usage fee?
Because unlike many commodities, electricity, once generated, is hard to store, yet supply must match demand in real time. You need to meet peak demand, even if normal usage is not as high. If you pay purely for usage, that might not send enough price signals to ensure that you have the necessary capacity when you need it. https://www.canarymedia.com/articles/enn/explainer-how-capac... has a more detailed overview of how markets are being structured to provide capacity, separate from actual generation.
Hmmm, if you take a brick and mortar store, they have fixed costs to renovate and decorate the store, and they likely have capacity of the store that is not used during non-peak period as well. They charge for item sold, to cover for all costs they incurred for capacity of the store even during non-peak period as well. Is this an equivalent comparison? Don’t businesses generally roll in the fixed costs into their price and charge per unit still?
Are you familiar with why movie theaters offer matinee tickets at a lower price?
It’s not like a brick and mortar store, it’s more like a hospital.
> I am curious how electricity is priced. Why are more and more utility providers charge based on ‘infrastructure cost’ or ‘fixed platform fee’ instead of usage fee?
This is also happening in Australia. I wonder if it is a similar story in the US, or not.
In Australia, rooftop solar and batteries have become so widespread, many properties have dramatically reduced their consumption of power from the grid. This poses a problem when electricity usage costs are used, not just to cover the power consumed, but also the grid infrastructure, much of which are fixed costs which are incurred irrespective of actual usage. In response, the regulator is looking at changing the billing structure to increase the fixed part of the bill which you pay irrespective of how much power you use.
Yea it's the same thing in California and will likely be a growing problem.
What happens (in Australia and in California) if rooftop solar and battery technology really have a huge breakthrough and the capacity of the major power generators were never utilized in the lifetime of those generators? Do consumers just ‘bail out’ the power generation companies?
Those consumers still want to have power for the few weeks that solar and battery dont cut it, dont they?
because as part of their legal monopolies they are only allowed to charge a "reasonable" usage fee.
ETA: utility companies make profit on capex, not opex
That's mostly incorrect. In Maryland, like in most places in the country, the distribution infrastructure is controlled by regulated monopolies that buy power on the market from generators. Your bills separate out the fees for usage and the fees for distribution, and the Maryland PSC has to approve both.
Yes, but the cost per kilowatt is at least partially based on capex recovery. That might be approved by the PSC but what they approve are capex projects and the recovery of them.
Only allowed to charge “reasonable” usage fee means no other non-usage fee allowed or it is purposely designed to allow other kinds of fees?
https://www.nrdc.org/bio/jc-kibbey/utility-accountability-10... To be clear this only about some utility companies.
Thank you for sharing this. I get that the company making the capital investment wants to get a return of 10% from their investment. The part I don’t understand is, why aren’t the return on investment being covered by the increased usage from the data centers (while the rate per usage stays flat)?
If the increase in usage (with rates staying flat) is insufficient to cover for the return on investment, then who is making the decision to take the risk for making these capital investment? The risk taker can definitely ‘pay’ for an over confidence in the market.
If it is because the increased usage of the grid as a whole reaches a step function requiring more investment, the system can have a gradually increasing usage price rate.
I am trying to find out if someone in the system is trying to eat up the benefits and publicly say “it’s because of AI” or maybe I am not understanding the situation well.
It's because it's a weird mix of subsidies, price controls, regulations and bureaucracy that has completely distorted the market incentives.
Two things I’d think
1) the first MW is cheaper to generate than the 100th. Newer plants. Cheaper fuels. More efficient. You run your good stuff always, for peak it’s on demand.
2) the cost of the old plants are already paid for, if adding a new data center requires a new plant; may add a big cost with a 50 year payback.
Perhaps utilities should be state owned where any profits are used to offset the tax load on the citizens..
They basically are. It really isn’t anything resembling an open market. They are effectively extensions of the state that happen to be funded by user fees rather than general funds.
Because there's this belief that a for-profit company will naturally be more efficient. No idea if that's actually true in practice though. Or if efficiency > the profits the company takes.
I don't know of any large community ran utilities, just small ones. I'm guessing the scale starts being a problem eventually.
They can be efficient, but I ly if the incentives align towards the desired definition of efficiency. If you give a company a natural monopoly and protection from competition. Then it's most efficient way to make money is just to raise rates
TVA and the NY power authority are genuinely massive, government run utilities. Both are also known for pretty low power bills.
Nice! I didn't know about those. Although it's hard to directly compare rates since cost can be so geographically dependant.
I'm not familiar with the Maryland power grid, but I've observed in other places that putting data centers in places with older / inadequate grids can / will require upgrades to handle the new load.
This recent article from Semianalysis did a great job explaining part of it: https://newsletter.semianalysis.com/p/are-ai-datacenters-inc...
Here's some very recent writing that will help you understand what's happening:
https://www.organizedmoney.fm/p/how-private-equity-is-drivin...
https://www.thebignewsletter.com/p/data-centers-arent-the-ma...
Kind of stuff that can radicalize a young family struggling to make ends meet...
Maybe the AI guys should use the AI first to develop fusion reactors they can then use to power the data centers.
I honestly think they should pay fully for the infrastructure that provides power for them. It's not fair to have regular users pay for this.
If they have to pay for all the infrastructure themselves, the current financing model does not pencil out.
Maybe that’s because their financing model doesn’t make sense.
Then they go bust, and competitors who priced this in and have a better financing model end up the winners who take the market. Thought that was the free market capitalism that the US prided itself on?
I've been saying this is going to be _the_ biggest political issue of the upcoming midterms and then the 2028 election. High electricity prices are something that really whacks the middle class, there's an easy bogeyman to hate here (AI and datacentres, neither of which are popular), and it crosses partisan lines.
I wrote a multi-page essay about this for our condo association last year. There's lots of complexity and externalities here — Pepco grid modernization, PJM interconnection cap auctions, AI buildouts in NOVA, etc; it's a really complicated issue.
who is actually signing off on these agreements to build it, knowing the bill goes to the locals? seems openly shady
Varies on the project. As someone dealing with this locally, it varies how the project got approved. Almost all the approval is at local level, sometimes at state level. Feds getting involve is pretty rare.
A) Sometimes, it's existing datacenter that repurposed from "normal" datacenter to AI datacenter with power consumption skyrocketing. There generally is not a ton of approval in this case or power company came by asking for additional infrastructure approval and who the hell denies that.
B) Some areas classed datacenters as "industrial" use so they could be built without a ton of preapproval. Most counties have closed that loophole but existing permits may allow additional datacenters to be built.
C) Local officials approving things over desire of the voters. Alot of people don't pay attention to their local politicians despite them having most impact on their day-to-day life. Therefore, you end up with local politicians who will believe whatever they are told along with just plain overall corruption. Most of it legal.
Also, as someone who used to live in Capital Region, National Politics can suck out all oxygen in the room so local officials are even less likely monitored.
The industrial use also often comes with fantastically low rates as well.
Virginia finally started saying folks using >25MW need to pay something more than the incredibly cheap rates they had been given. But generally data centers have often gottem marked as industrial, and it's been incredibly fantastically advantageous to do so.
Those closest to the beltway…
Apparently not. Maryland residents didn’t sign any of these agreements in other states. Nor did their elected representatives. They were just presented with the bill to support the infrastructure in the other states because, you know, they’re so cool. And it doesn’t get any closer to the beltway than Maryland.
What’s crazy is the utility company admits that the infrastructure is for the growth in the other states. They admit Maryland won’t grow as fast. They concede Maryland needs less infrastructure. But still saddled Maryland residents with the extra bills for out of state data centers?
I mean, at least say it’s for Maryland. Just to make it look good? I don’t know? Make some kind of attempt to make it palatable.
I’m wondering if it’s just easier to pass the cost on to people in Maryland than it is in other states? Like is the regulatory environment with respect to this kind of thing more lax or something?
There has to be some kind of explanation. Because on the face of it, this just doesn’t look good. It makes ai and tech industry just seem like robber barons. And tech guys don’t need that right now.
One of Ohio's bigger utilities (AEP) recently just got a new tariff passed with the PUCO that required big electric users (i.e., datacentres) to actually commit with hard money when they said they expected some large increase in demand.
The amount of power datacentres said they were going to use dropped significantly - well over half. So now the utility has far less it has to worry about in big time transmissions build outs.
All from making the people claiming they needed it put a modest amount of money forward. They have to pay $100k (for a 100-MW project) to do a load study. Then they have to agree that they will pay for the electricity they claim they're going to use, even if they end up not using it (i.e., the data centre doesn't get built out and they end up using 0.)
If their credit rating is not strong enough, they have to pledge security or else put up the money.
A lot of data centre operators wouldn't cough up the $10k or $100k needed for the load study. Everything got a lot easier.
Excellent move, and I am surprised it was effective at such a low annoyance price.
The rumor is that many of the data centers have been shopping around in different utility markets, trying to assess where they could get the best/fastest build out. However, they are never informing the utility of sites which they will not develop. So some of these massive data centers may be getting double or triply counted for electricity demand projections.
It's for "the grid", of which Maryland is a part, so it supposedly derives some benefit.
And since the grid is being updated to accommodate new paying customers, Maryland will benefit from lower future prices. Right? Right?
Uh, yeah. Yeah, future prices will be lower. That's sure how this worked out before!
these out of state AI companies are fairly quickly going to realize that their lobbying for the CURRENT administration doesnt mean shit after the next election.
they're going to have to learn to be a lot more thoughtful about the seething masses (that their products are forcing them to lose jobs to)...
You're assuming that we're going to see a transition to a new administration with different priorities in the near future.
just to be clear, i mean the state administration not federal.
but yes.. unless democracy breaks down completely.
We've been here before [1]. In that case, extra load on the grid meant the municipality needed to purchase more power (at higher prices), which raised everybody's prices.
Electricity supply is highly regulated. Prices for electricity are constrained and often set by state regulators. These are so-called "usage fees". But beyond that the utility is allowed to charge customers for infrastructure and transmissio and those fees are out of control. We recently had a court case where a North Carolina utility illegally overcharged customers but the judge didn't assign damages because legally the utility could just charge customers for those damages [2]. And the legislature passed laws to protect the utility as well.
This is going to get worse too because private equity is rapidly moving into this market and they know that capex can be entirely pushed onto customers with no recourse.
So the data centers tend to get sweetheart deals on electricity too. So while the total cost of electricity has gone up (per Mwh), they pay less pushing even more burden onto everyone else. Plus they get discounts on property taxes, energy tariffs and other taxes, as in the case of Kevin O'Leary's mega-DC in Utah.
But this state interconnect bill is another level of evil because it's pushing the costs onto states that have nothing to do with the data center and won't get any "benefit" (there is no benefit) anyway.
What we need are laws that make these projects pay for their own infrastructure. This might cause them to build near power sources. Great. Away from people, mostly.
The level of regulatory corruption here is actually sickening. Take Elon's Grok DC in Memphis that exploits local laws against clean air by using "mobile" gas turbines in the city of Memphis.
[1]: https://newsroom.haas.berkeley.edu/research/power-hungry-cry...
[2]: https://www.wcnc.com/article/news/local/no-refunds-for-duke-...
> (there is no benefit)
This is the craziest part. We've long had publicly subsidized private projects, or corporate tax breaks given to entities with the fig leaf explanation that the projects will bring economic activity, or jobs, or some sort of long lasting, durable benefit, or even at its most craven, keep a stupid populace happy that their favorite sportsball team hasn't left their town.
Datacenters do none of these things. They don't bring any true employment numbers to make a difference. They don't materially improve their surroundings. They don't increase land value. They aren't an attractive neighbor. They don't benefit the tax base, not least of all when you're doling out massive tax breaks and deferments... no one _wants_ them, so it's not even like this is a "well, you're just not a Buffalo Bills fan, but the rest of us are, get on board!" situation.
There is zero net benefit to the citizens in these places to welcome these facilities to their town. Shorter latency to their chatbot of choice, maybe? But in any practical, moral hazard sense, these are all pure net negatives for the communities, and it's wild that these leaders think they're some sort of marquee, glamorous, prestigious win of a project.
Compare this with other, things-that-rhyme-but-aren't-the-same projects, like the TSMC fabs in Phoenix: these projects are bringing a ton of high-paying, new jobs (and, somewhat controversially, an expat community from Taiwan to help onboard them in the meantime), but they're also delivering in other economic terms because of the supply chain's knock-on effects: the TSMC fabs further the reputation of Phoenix as the Silicon Desert that Intel, OnSemi, Microchip, and Motorola had long been working towards, but at a much more amplified scale, and in a truly meaningful capacity. The money being spent here is staying here, and driving some real practical benefits. But even still, it's an open conversation around how careful we need to be with the water usage of these fabs (though TSMC is aiming towards 90%+ recapture in the next few years, I think it's ~60% right now), and other considerations... they are still, on balance, bringing 6,000-12,000 direct jobs, and even more indirect jobs as they continue to expand.
These datacenter projects don't even do _that_ well. They're just upsetting the power grid and creating unfortunate microclimates for the immediate vicinity for a handful of NOC jobs. (And some itinerant construction and engineering jobs.)
A bunch of mini Enron 2.0's that aren't actually mini
Can someone explain to me why local governments are so against datacenters? It seems like a golden opportunity to build electric infrastructure that's paid for by corporations and if AI is a bubble at least that infrastructure will remain and continue to provide cheap power.
Existing power infra is likely fine enough for current demands. And building new infra doesn't necessarily mean it will be any cheaper to operate or use. So with datacentres providing rather little local economic activity after being build and potential impact on electricity costs say during night overall they are not that beneficial.
If your town users a peak of say 100MW and is powered by two 50MW feeds
Then a new DC creates another 300MW of demand and builds 300MW more feeds
Then the DC goes bust, you're left with 350MW of potential supply and 50MW of demand
Compare with a highway, you had a 2 lane road, and it was fine, with 1000 cars an hour, then someone expanded it to 8 lanes and filled them with another 3000 cars an hour.
Then they vanished, and you're left with an 8 lane road for 1000 cars an hour, paying 4 times the maintenance for extra unneeded capacity.
You're kidding yourself if you think people are laying down in front of bulldozers out of concern for trivial maintenance costs on under-utilized grid capacity.
The assertion was this was a "golden opportunity"
In reality there's nothing to gain in theory, and in practice it correlates with higher energy costs
Fear of change due to AI, masquerading as concern for the one thing about technological progress that a local city council has the power to obstruct: building physical buildings (classic NIMBY-ism).
Basically every AI company using "catastrophizing" and "ragebait" as their marketing strategy is working so well that normies are afraid they're going to lose their cushy do-nothing desk jobs. Hence the braindead/conspiracy narratives that data centers are going to drink all the fresh water, give your kids cancer, kill the plants and quadruple your electric bill.
What's most hilarious about this; dramatically expanding the power grid is absolutely necessary to get off of fossil fuels, yet the same people who used to scream about climate change are now trying to block grid upgrades paid for by data centers. With zero awareness of the irony.
This will only get worse as time goes on because first world countries are aging at increasing rates. Old people hate change. They're deficit spending their children's future labor while obstructing the creation of anything productive that might dig us out of the hole they put us in.
Seems people have the choice between power outtages and getting pollution by the untreated exhausts of small gas turbine that are running on the premises of AI data centers. It's horrible for humans.
Humans are so annoying, can't they move away from data centers?/s
I'll be the first to complain about Texas being on its own energy grid and the dumpster fire of resultant things that happen because of it, but it is worthwhile to call out that this sort of thing is not possible in Texas because of that.
Texans just get surprise thousand dollar+ bills for one night of usage as the demand charge allows... if they get any power at all