In recent years, significantly higher electricity demands have been forecasted with the growth of large-load data centers, driven primarily by the development of artificial intelligence. The projected growth of data centers has caused utilities and states to grapple with important questions for all electricity consumers: who bears the cost burden for the infrastructure and new generation necessary to support new large-load customers, and how will enough generation be built in time to support the rapid growth?

Last month, this question began to get answered in Georgia, as reported by Data Center Frontier, where the Georgia Public Service Commission (Georgia PSC) unanimously approved a regulation addressing the energy consumption of the state's large-load customers. The regulation applies to new Georgia Power customers whose energy usage exceeds 100 megawatts (MW) and requires that these customers cover the transmission and distribution costs incurred during their data center's construction. The regulation also requires that any new contracts between Georgia Power and such large-load customers must be submitted to the Georgia PSC for review. In supporting the regulation, the Georgia PSC Chairman, Jason Shaw, stated that the regulation helps "ensure that existing Georgia Power customers will be spared the additional costs associated with adding these large-load customers to the grid."

Not all states appear to be addressing these growing energy demands with the same urgency. The Virginia Mercury reported that Virginia is projecting to triple electricity demand in large part due to unconstrained data center growth. The rapid data center growth is expected to outstrip the state's ability to build new generation and increase utility bills for all Virginia customers. To date, the Virginia legislature has largely been unable to approve bills addressing these issues. As a result, the risk remains that if these planned data centers do not come to fruition or fail, there will be significant stranded costs as a result of the infrastructure and generation investment that may fall upon remaining Virginia ratepayers.

A separate, related concern, as discussed by Inside Climate News, is that the higher electric demands caused by data center growth will contribute to the use of more fossil fuels. Across PJM Interconnection's 13-state region, by 2030, the summer peak load forecast is expected to be 9.5 percent higher than was forecast for that point just last year. With these rapid increases in projections comes the concern among environmental interests that the extra electricity demanded will come mostly from fossil fuel sources, chiefly natural gas. As reported by Environment America, advocates are thus recommending that the public should not bear the environmental and economic costs of data centers' enormous energy consumption. As reported by Data Center Dynamics, this concern is reinforced by PJM Interconnection's recent receipt of approval to fast-track power projects to address soaring energy demand, which likely includes several large gas generation projects. 

The rapid growth of data centers, and the resulting energy demand placed on our nation's electric grid, raise several concerns that will impact all electricity consumers. While some states have begun grappling with the cost burden concerns, there remains significant unknowns. The required infrastructure and generation to support the projected load growth will take massive investments, and the risk remains that those costs will be imposed on all ratepayers. Additionally, it remains unclear whether regulators will be able to approve sufficient generation in a timely fashion, and whether such generation will come from fossil fuels or renewable energy. Regardless, the rise in electricity demand is a quickly evolving issue that needs to be closely monitored in the coming years.