AI Frenzy complicates efforts to keep energy-hungry data sites green
West Texas, from the oil platforms of the Permian Basin to the wind turbines spinning above the High Plains, has long been a magnet for companies looking to make fortunes in energy.
Now these arid ranchlands offer a new money-making opportunity: data centers.
Lancium, an energy and data center management company with offices in Fort Stockton and Abilene, is one of many companies across the country betting that building data centers close to energy generation sites will allow them to tap underutilized clean energy.
“It’s a land grab,” said Lancium president Ali Fenn.
In the past, companies built data centers close to Internet users to better meet consumer requests, such as streaming a show on Netflix or playing a video game hosted in the cloud. But the growth of artificial intelligence requires massive data centers to train the evolving large-language models, making proximity to users less necessary.
But as more and more of these sites pop up across the United States, new questions are arising about whether they can meet demand and still operate sustainably. The carbon footprint of building the centers and racks of expensive computer equipment is substantial in itself, and their energy needs have increased significantly.
Just ten years ago, data centers used 10 megawatts of power, but today 100 megawatts is common. The Uptime Institute, an industry advisory group, has identified 10 super-large cloud computing campuses in North America with an average size of 621 megawatts.
This growth in electricity demand comes as production in the United States is the highest in the past half century, and the electricity grid is becoming increasingly stressed.
The Uptime Institute predicted in a recent report that the industry’s numerous net-zero targets, which are self-imposed benchmarks, would be much harder to achieve in light of this demand and that economic rollbacks could become common.
“This isn’t just about data centers,” said Mark Dyson, director of RMI, a nonprofit organization focused on sustainability. “Data centers are a practice run for a much larger wave of load growth that we are already seeing and will continue to see in this country as a result of the electrification of industry, vehicles and buildings.”
The data center industry has embraced more sustainable solutions in recent years and has become a major investor in renewable energy at the corporate level. Locations that lease wind and solar energy jumped 50 percent year after year from early 2023, to more than 40 gigawatts, a capacity that continues to grow. Yet demand exceeds those investments. And the need for more processing power supports the interconnection queue and creates stopgap solutions.
Data centers operating at full capacity and consuming a lot of energy further complicate the balance. Data centers in the construction pipeline, when completed, would consume as much electricity annually as the San Francisco metro area, according to a report released Wednesday by real estate services company JLL. Most of the sites coming online this year have already been rented out; no significant space will become available in popular markets over the next two years.
“You need to get as many gigawatts live as possible, as quickly as you can,” said Lancium’s Ms. Fenn. “People are going to put that together in whatever way they can.”
That has quickly expanded development beyond established first- and second-tier markets, such as Northern Virginia, Dallas and Silicon Valley.
Competition is growing in parts of the country that offer cheap land and available power. Amazon, for example, announced plans last month a $10 billion project in Mississippithe state’s largest economic development project, which includes data centers and solar power plants.
“Anyone who has a significant energy source has now become a new data center market,” said Jim Kerrigan, president of North American Data Centers, an industry consultancy.
AI makes up only a small percentage of the global data center footprint. The Uptime Institute predicts that AI will rise to 10 percent of the industry’s global power consumption by 2025, up from 2 percent today.
“They’ve been building at a breakneck pace with so many other types of demand drivers,” said Andy Lawrence, executive director of research at the institute. “AI is the foam on top.”
Last year, construction of data centers increased by 25 percent, according to real estate company CBRE. And Nvidia, which last week delivered most of the high-tech chips that power this technology reported record profits in data center saleswith 2023 sales of $47.5 billion, up 217 percent from the previous year.
The country’s energy grids can’t handle that kind of demand, said Christopher Wellise, vice president of sustainability at Equinix, a global data center operator. “Technology is evolving faster than our infrastructure has evolved,” he said.
Equinix, which operates 260 data centers around the world, has installed fuel cells from Bloom Energy to provide backup power to many of its data centers. The company also reduces emissions with offsets, such as through power purchase agreements, and has achieved 5 percent more efficiency from its operations in the past year, Mr. Wellise said. Design firms like Gensler have experimented with new solid wood designs to reduce carbon emissions from data centers.
And AI itself can help: In a data center in Frankfurt, Equinix used the technology to moderate cooling loads and adapt energy consumption to changing weather, making a data center 9 percent more efficient.
Niklas Sundberg, a sustainable IT expert and chief digital officer at Kuehne + Nagel, a transport and logistics company in Sweden, said the industry should focus on investing in sustainable generation capacity.
Some sites tried to install gas-fired power stations on site to compensate for shortages in the electricity grid. It may be cleaner than existing energy, but it adds to the industry’s significant carbon footprint.
And lawmakers have proposed more transparency and action. The Senate submitted a proposal in early February assess the impact of AI on the environment. Lawmakers in Northern Virginia, known as Data Center Alley, have pushed to mandate sustainability goals for data centers.
Suhas Subramanyam, a Virginia state senator, proposed a number of rules, including one requiring data centers to at least 90 percent of their electricity from renewable sources is eligible for subsidies. “I don’t want to put my kids in a situation where 20 years from now they have to pay some of the bills for things that we thought were a good idea and turned out not to be,” he said.