Editor-DN
Utilities, power regulators and researchers in half a dozen countries told Reuters that the rise of artificial intelligence has led to a dramatic increase in electricity demand. Cloud computing Natural gas and even fossil fuels such as coal are being more or less met, as the pace of clean energy deployment is too slow to keep up.
i The United StatesHome to one-third of the world’s data centers, utilities are adding new gas plants and delaying the retirement of fossil-fuel power plants as massive new data centers join the grid. Coal in Poland, Germany and Malaysia could also be in the mix, according to interviews with company executives, regulators and analysts. The approach is a new hurdle for world governments, now gathered at the annual United Nations climate conference in Baku, already struggling to meet ambitious goals to decarbonize power systems. are
COP29 Host Azerbaijan held the first Digitalization Day at the World Climate Summit, and 68 countries, including China and Korea, have so far issued a declaration to limit the environmental impact of digitalization.
The Outlook data also reveals flaws in the company’s green commitments. Companies including Meta Platforms, Microsoft And Amazon.com are committing to zero emissions with renewable energy acquisition and clean power and offset credits — but often that just means taking clean power off the grid that could be used elsewhere. Meanwhile, deals by data providers to power new data centers with modern nuclear reactors or revived nuclear plants remain uncertain and years away.
“I think everyone agrees that we need more and more renewable energy to keep up with growing demand,” said META spokesman Jim Cullenan. “I think it’s up to the utilities to comment on how they’re going to fill the supply.” Amazon told Reuters that investing in new renewable energy for the grid, including in regions heavily reliant on fossil fuels, is part of its strategy to decarbonise. Investment bank Morgan Stanley projects that the global data center industry will generate about 2.5 billion metric tons of carbon dioxide equivalent by the end of the decade, equivalent to the annual emissions of Russia.
Pumping the gas
Northern Virginia in the US has the largest concentration of data centers in the world. Utility Dominion, which serves the area, has the answer: gas.
The utility is building a 1,000 megawatt gas plant in Chesterfield County and recently lowered its 15-year projection for renewables from 95% of its power mix to 80%.
“Overall, electricity demand in our service area is growing at an unprecedented pace,” said spokesman Aaron Ruby.
A number of other U.S. utilities said they are longing fossil-fueled power plants and building new facilities as data center demand surges, according to a Reuters review of recent company earnings calls.
For example, Entergy began building its first natural gas-fired power plant in half a century, the company said. The 754-megawatt power station will serve two Amazon data center complexes being built in Mississippi.
About half of utility NiSource’s $19.3 billion in new capital spending plans through 2029, meanwhile, will be spent on natural gas system improvements, the company said. NiSource covers the fastest growing data center markets in parts of Indiana, Ohio and Virginia.
Natural gas is an obvious answer for data centers, said Rob Thimmel, senior portfolio manager at Tortoise Capital.
“It’s just the lowest cost, the most reliable and it’s decarbonizing in terms of replacing coal,” he said. “Is it the perfect solution? No, but I don’t know if we have a perfect solution for powering these data centers.” Data centers could increase U.S. natural gas demand by 3 billion to 6 billion cubic feet per day by the end of the decade, S&P said.
That would worsen the U.S.’s performance on emissions, possibly for decades, said clean energy consultancy RMI.
“Data centers are just a warm-up act compared to the amount of power supply. And if our first instinct is to start building gas plants and nuclear plants to do that, we’re just going to build an energy system. for what we can’t afford,” said RMI CEO Jon Crates. President-elect Donald Trump has said he plans to boost the U.S. power system when he takes office, and sources close to his transition team have said his plans prioritize gas development over renewables. It is likely to be preferred.
Coal in the mix?
Research firm McKinsey said in a report last month that most of the growth in data center electricity consumption in the EU by 2030 would be provided by low-carbon sources.
McKinsey declined to elaborate when asked whether low-carbon sources include natural gas, and whether the trend could extend the life of coal.
Data centers in some parts of Europe will need coal.
In Poland, for example, the rush of new data center projects will need to be at least partially powered by baseload sources such as coal due to the still small amount of renewables in the country, according to Resource Poland. A platform for corporate renewable energy acquisitions, according to Zemon Kowalski, vice president.
According to the International Energy Agency, the share of coal in Poland’s energy mix has been falling for years as it boosts renewables, but still remains above 60 percent in 2023.
In Ireland, meanwhile, data centers now account for more than 20% of electricity consumption, according to the IEA.
System operator EirGrid told Reuters it would meet demand with 650 megawatts of temporary emergency generation capacity and by delaying the retirement of older generators. Natural gas will be an important part of the mix, he said.
Ireland’s only coal station, ESB Group’s 915 MW Moneypoint plant, extended its retirement date from 2025 to 2029 last year, but plans to burn fuel oil instead of coal during that period.
In Germany, Microsoft announced plans this year to expand data center capacity with a 3.2 billion euro ($3.38 billion) investment near the 400-meter-deep Hambach coal mine.
Microsoft declined to say whether the project would rely on coal. “We’re still in the early stages of the project, so we don’t have any comment,” spokesman Joe Klein said.
In Malaysia, some data companies are taking power from grids dominated by coal and gas instead of paying a premium for renewables, according to a government official familiar with the matter. The official said less than 50 percent of the green power Malaysia had sought for auction this year had been purchased.
