Exelon has seen an 80% increase in power supply deals coming from data enter operators in the latest sign that the IT industry is driving a surge in electricity demand in the U.S.
The rise has materialized since the start of the year and has prompted debates about the distribution of costs associated with the expansion of grid infrastructure and the ramp-up of supply.
In Exelon’s territory, demand for electricity from data center operators hit 11 GW in the third quarter, up from 6 GW in the second quarter, the company said in its third-quarter earnings call. Exelon has yet to build that capacity, which will be part of its investment plan, which stands at $34.5 billion for the period until 2027.
Reuters noted in a report on Exelon’s demand developments that the company is disputing a priority status granted by regulators to data center operators that locate their facilities on the sites of power plants—what’s commonly known as co-location.
Currently, the Federal Energy Regulatory Commission allows the operators of such data centers to get hooked to the power plant directly, bypassing interconnection procedures. According to Exelon and fellow utility American Electric Power, this can lead to price hikes for other consumers and affect the reliability of the grid negatively.
“We are not against co-locations,” Exelon CEO Calvin Butler said on a third-quarter company earnings call. “We just believe everyone should pay their fair share of utilizing the grid.”
Data centers have become perhaps the biggest drivers of additional electricity demand in the United States, as Big Tech companies race to get ahead in the development of artificial intelligence systems. These consume enormous amounts of electricity that needs to be available on demand.
This additional demand for reliable power has shined the spotlight on natural gas and nuclear as baseload alternatives to previous Big Tech darlings wind and solar. It has also highlighted the constraints of the grid that cannot be overcome quickly.
By Charles Kennedy for Oilprice.com