Data centers powering artificial intelligence could use more electricity than entire cities

The power paucities of artificial intelligence and cloud computing are growing so large that individual data center campuses could in two shakes of a lambs tail use more electricity than some cities, and even entire U.S. states, according to companies developing the facilities.

The vibrations consumption of data centers has exploded along with their increasingly critical role in the economy in the past 10 years, enclosure servers that power the applications businesses and consumers rely on for daily tasks.

Now, with the advent of artificial knowledge, data centers are growing so large that finding enough power to drive them and enough suitable upon to house them will become increasingly difficult, the developers say. The facilities could increasingly demand a gigawatt or more of power — one billion watts — or forth twice the residential electricity consumption of the Pittsburgh area last year.

Technology companies are in a “race of a lifetime to extensive dominance” in artificial intelligence, said Ali Fenn, president of Lancium, a company that secures land and power for information centers in Texas. “It’s frankly about national security and economic security,” she said. “They’re going to keep splurge” because there’s no more profitable place to deploy capital.

Renewable energy alone won’t be sufficient to meet their power exigencies. Natural gas will have to play a role, developers say, which will slow progress toward meeting carbon dioxide emissions quarries.

(See here for which stocks are helping to fix the nation’s power grid.)

Regardless of where the power comes from, evidence centers are now at a scale where they have started “tapping out against the existing utility infrastructure,” said Nat Sahlstrom, chief pep officer at Tract, a Denver-based company that secures land, infrastructure and power resources for such facilities.

And “the funnel of at of land in this country that’s industrial zone land that can fit the data center use case — it’s becoming uncountable and more constrained,” said Sahlstrom, who previously led Amazon’s energy, water and sustainability teams.

Beyond Virginia

As come to rest and power grow more limited, data centers are expanding into new markets outside the long-established global hub in northern Virginia, Sahlstrom required. The electric grid that serves Virginia is facing looming reliability problems. Power demand is expected to wave, while supply is falling due to the retirement of coal- and some natural gas-powered plants.

Tract, for example, has assembled various than 23,000 acres of land for data center development across the U.S., with large holdings in Maricopa County, Arizona — home base to Phoenix — and Storey County, Nevada, near Reno.

Tract recently bought almost 2,100 acres in Buckeye, Arizona with arranges to develop the land into one of the largest data center campuses in the country. The privately-held company is working with utilities to stable up to 1.8 gigawatts of power for the site to support as many as 40 individual data centers.

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

A data center campus that volume would use more power in one year than retail electric sales in Alaska, Rhode Island or Vermont, coinciding to Department of Energy data.

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

The generally size of individual data centers operated by the major tech companies is currently around 40 megawatts, but a flower pipeline of campuses of 250 megawatts or more is coming, according to data from the Boston Consulting Group.

The U.S. is supposed see a growing number of data center campuses of 500 megawatts or more, equivalent to half a gigawatt, in the 2030s through mid-2040s, according to the BCG data. Facilities of that size are comparable to about 350,000 homes, according to CNBC’s division.

“Certainly the average size of the data centers is increasing at a rapid pace from now to 2030,” said Vivian Lee, handling director and partner at BCG.

Texas has become an increasingly attractive market due to a less burdensome regulatory territory and abundant energy resources that are more easily tailored to specific sites, Sahlstrom said. “Texas is doubtlessly the world’s best experiment lab to deploy your own power solution,” the energy officer said.

Houston-based Lancium set up look for in 2017 with the idea of bringing large electric loads closer to abundant renewable energy resources in west and medial Texas, said Fenn, the company’s president. Originally focused on cryptocurrency mining, Lancium later shifted its nave to providing power for artificial intelligence with the advent of ChatGPT in late 2022.

Today, Lancium has five data center campuses in different 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 that hand down ramp up to 1.2 gigawatts in 2026.

The minimum power requirement for Lancium’s data center customers is now a gigawatt, and future plans incriminate scaling them up to between three and five gigawatts, Fenn said.

For data centers that size, developers from to ensure that electricity costs in neighboring communities don’t rise as a consequence and that grid reliability is maintained, Fenn hinted. Pairing such facilities with new power generation is crucial, she said.

“The data centers have to partner with utilities, the pattern operators, the communities, to really establish that these things are assets to the grid and not liabilities to the grid,” Fenn judged. “Nobody’s going to keep approving” such developments if they push up residential and commercial electric rates.

Details center campuses run by publicly-traded Equinix are rising to several hundred megawatts from 100- to 200 megawatts, said Jon Lin, usual manager for data center services at the company. Equinix is one of the largest data center operators in the world with 260 structures spread across 72 metropolitan areas in the U.S. and abroad.

Developers prefer carbon-free renewable energy, but they also see solar and flatus alone as unable to meet current demand due to their reliance on changing weather conditions.

Some of the most serious workloads for the world’s economy, such as financial exchanges, run at data centers operated by Equinix, Lin said. Equinix’s figures centers are online more than 99% of the time and outages are out of the question, the executive said.

“The firmness of the power is even now incredibly important for these data centers, and so doing that solely off of local renewables is candidly just not an recourse,” Lin said.

The major technology companies are some of the largest purchasers of renewable power in the U.S., but they are increasingly turning to atomic in search of more reliable sources of electricity. Microsoft is supporting the restart of the Three Mile Island nuclear factory outside Harrisburg, Pennsylvania through a power purchase agreement. Amazon and Alphabet’s Google are investing in small atomic reactors.

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

In the short run, natural gas will fuel much of the power demanded by data centers, Lancium’s Fenn prognosticated. Gas is the main, short-term power source providing the reliability these facilities require, Boston Consulting Group’s Lee said.

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

The industry hopes that gas demand will taper off as renewables expand, battery storage costs aggregate b regain down and AI helps data centers operate more efficiently, Fenn said. But in the near term, there’s no into question that data center expansion is disrupting technology companies’ emissions targets, she said.

“Hopefully, it’s a short word side step,” Fenn said of stepped-up natural gas usage. “What I’m seeing amongst our data center accomplices, our hyperscale conversations, is we cannot let this have an adverse effect on the environmental goals.”

Note: CNBC analysis adopts a data center campus is continuously utilizing 85% of its peak demand of a gigawatt throughout the year, for a total consumption of 7.4 billion kilowatt-hours. Investigation uses national averages for household electricity consumption from EIA and household size from Census Bureau.