AI-powered data centers can consume more electricity than entire cities

Artificial intelligence and cloud computing’s energy needs are growing so dramatically that individual data centers could soon use larger amounts of electricity than some cities and even entire U.S. states, according to companies developing the facilities.

Data centers’ electricity consumption and increasingly critical role in the economy have risen in the past 10 years, housing the servers that support the applications that businesses and consumers rely on for everyday tasks.

Now, with the advent of artificial intelligence, data centers are growing so large that finding enough power to run them and enough suitable land to house them will become increasingly difficult, developers say. Utilities can increasingly require a gigawatt or more of power — a billion watts — or about twice that Residential electricity consumption in Pittsburgh area last year.

Technology companies are in the “race of a lifetime for global dominance” in artificial intelligence, said Ali Fein, the technology company’s president Lancium, a company that secures land and power for data centers In Texas. “It’s frankly about national security and economic security,” she added. “They will keep spending” because there is no more profitable place to deploy capital.

Renewable energy alone will not be enough to meet their energy needs. Developers say natural gas will have to play a role, which will slow progress toward meeting carbon dioxide emissions targets.

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Regardless of the power source, data centers have now reached a level where they are beginning to “exploit existing utility infrastructure,” said Nat Sahlstrom, the company’s chief energy officer. Tracta Denver-based company that secures land, infrastructure and energy resources for such facilities.

“The path of available land in this country — industrial park land that can fit a data center use case — is becoming increasingly constrained,” said Sahlstrom, who previously led Amazon’s energy, water and sustainability teams.

Beyond Virginia

As land and energy become increasingly limited, Sahlstrom said, data centers are expanding into new markets beyond the established global hub in northern Virginia. The electric grid serving Virginia has looming reliability problems. Energy demand is expected to rise, while supply will decline due to the retirement of some coal and natural gas-fired power plants.

For example, Tract has amassed more than 23,000 acres of land for data center development across the United States, with large properties in Maricopa County, Arizona — home to Phoenix — and Story County, Nevada, near Reno.

tract recently He purchased approximately 2,100 acres in Buckeye, Arizona, with plans to develop the land into one of the largest data centers in the country. The privately held company is working with utilities to secure up to 1.8 gigawatts of power for the site to support up to 40 individual data centers.

For context, a data center campus with peak demand of one gigawatt is roughly equivalent to the average annual consumption of about 700,000 homes, or a city with a population of about 1.8 million people, according to a CNBC analysis using data from Department of Energy and Census Bureau.

A data center campus of this size will use more energy in one year than retail electricity sales in Alaska, Rhode Island or Vermont, according to Ministry of Energy data.

A gigawatt-sized data center campus still operating even at the lower end of peak demand is roughly comparable to about 330,000 households, or a city of more than 800,000 people — equivalent to the population of San Francisco.

The average size of individual data centers run by big tech companies currently is about 40 megawatts, but there is a growing pipeline from universities of 250 megawatts or more coming, according to Boston Consulting Group data.

The United States is expected to see a growing number of data centers with a capacity of 500 megawatts or more, or half a gigawatt, in the 2030s to mid-40s, according to Boston Consulting Group data. Facilities of this size would be comparable to about 350,000 homes, according to a CNBC analysis.

“The average size of data centers is certainly increasing at a rapid pace between now and 2030,” said Vivian Lee, managing director and partner at Boston Consulting Group.

Sahlstrom said Texas is becoming an increasingly attractive market because of the less burdensome regulatory environment and abundant energy resources that can be more easily tailored to specific locations. “Texas is probably the best experimental laboratory in the world to deploy your energy solution,” the energy official said.

Houston-based Lansium set up shop in 2017 with the idea of ​​bringing large electrical loads closer to the abundant renewable energy resources in West and Central Texas, said Finn, the company’s president. Originally focused on cryptocurrency mining, it later became Lancium It shifted its focus to powering AI with the debut of ChatGPT in late 2022.

Today, Lancium has five data centers in various stages of development. A 1,000-acre campus in Abilene is expected to open in the first quarter of 2025 with 250 megawatts of power capacity that will reach 1.2 gigawatts in 2026.

The minimum power requirement for Lancium data center customers is now one gigawatt, and future plans include expanding that to between three and five gigawatts, Finn said.

For data centers of this size, developers have to make sure electricity costs in nearby communities don’t rise as a result and maintain grid reliability, Finn said. Connecting these facilities to new energy generation is crucial, she said.

“Data centers have to collaborate with utilities, system operators, and communities to demonstrate that these things are assets to the network and not liabilities to the network,” Finn said. “No one will continue to approve” such developments if they raise residential and commercial electricity rates.

The data center campuses are operated through public trading Equinix John Lin, general manager of data center services at the company, said that electrical power rises to several hundred megawatts from 100 to 200 megawatts. Equinix is ​​one of the world’s largest data center operators with 260 facilities spread across 72 metropolitan areas in the United States and abroad.

Developers favor carbon-free renewable energy, but also see solar and wind alone as unable to meet current demand due to their dependence on changing weather conditions.

Some of the most important workloads for the global economy, such as financial exchanges, run in data centers run by Equinix, Lin said. The executive said Equinix’s data centers are online more than 99% of the time and outages are out of the question.

“Power hardness is still very important for these data centers, so doing it only with local renewables is not an explicit option,” Lin said.

Big technology companies are some of the largest buyers of renewable energy in the United States, but they are increasingly turning to nuclear power in search of more reliable sources of electricity. Microsoft Supports the restart of the Three Mile Island Nuclear Plant outside Harrisburg, Pennsylvania, through a power purchase agreement. Amazon and Alphabet’s Google are investing in small nuclear reactors.

But building new nuclear reactors is expensive and fraught with delays. Two new reactors in Georgia It recently came online, years behind schedule and billions of dollars over budget.

In the short term, natural gas will fuel much of the power data centers need, Lansium’s Finn said. Gas is the primary short-term energy source that provides the reliability these facilities require, BCG’s Lee said.

Investments in new gas generation that adds carbon capture technology and battery storage could be made over time to mitigate the environmental impact, Lee said.

Finn said the industry hopes demand for gas will wane as renewables expand, battery storage costs fall, and artificial intelligence helps data centers operate more efficiently. But in the near term, there is no doubt that expanding data centers will disrupt technology companies’ emissions targets.

“Hopefully this is a short-term side step,” Finn said of increased use of natural gas. “What I see among our data center partners, and our broad conversations, is that we cannot allow this to have a negative impact on environmental goals.”

Note: CNBC’s analysis assumes that data center campuses continuously use 85% of peak gigawatt demand over the course of a year, for a total consumption of 7.4 billion kilowatt-hours. The analysis uses national averages for household electricity consumption from the Environmental Impact Assessment and household size from the Census Bureau.