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Data center construction “could delay California’s transition away from fossil fuels and raise electric bills for everyone else,” warns the Los Angeles Times — and also increase the risk of blackouts:
Even now, California is at the verge of not having enough power. An analysis of public data by the nonprofit GridClue ranks California 49th of the 50 states in resilience — or the ability to avoid blackouts by having more electricity available than homes and businesses need at peak hours… The state has already extended the lives of Pacific Gas & Electric Co.’s Diablo Canyon nuclear plant as well as some natural gas-fueled plants in an attempt to avoid blackouts on sweltering days when power use surges… “I’m just surprised that the state isn’t tracking this, with so much attention on power and water use here in California,” said Shaolei Ren, associate professor of electrical and computer engineering at UC Riverside. Ren and his colleagues calculated that the global use of AI could require as much fresh water in 2027 as that now used by four to six countries the size of Denmark.

Driving the data center construction is money. Today’s stock market rewards companies that say they are investing in AI. Electric utilities profit as power use rises. And local governments benefit from the property taxes paid by data centers.

The article notes a Goldman Sachs estimate that by 2030, data centers could consume up to 11% of all U.S. power demand — up from 3% now. And it shows how the sprawling build-out of data centers across America is impacting surrounding communities:

The article notes that California’s biggest concentration of data centers — more than 50 near the Silicon Valley city of Santa Clara — are powered by a utility emitting “more greenhouse gas than the average California electric utility because 23% of its power for commercial customers comes from gas-fired plants. Another 35% is purchased on the open market where the electricity’s origin can’t be traced.” Consumer electric rates are rising “as the municipal utility spends heavily on transmission lines and other infrastructure,” while the data centers now consume 60% of the city’s electricity.

Energy officials in northern Virginia “have proposed a transmission line to shore up the grid that would depend on coal plants that had been expected to be shuttered.”

In 2022 an Oregon newspaper discovered Google data centers were consuming 29% of one city’s water supply.

“Earlier this year, Pacific Gas & Electric told investors that its customers have proposed more than two dozen data centers, requiring 3.5 gigawatts of power — the output of three new nuclear reactors.”

To build the massive datacenters generative AI requires, major companies like Amazon and Microsoft “are going nuclear,” reports CIO magazine. AWS:
Earlier this year, AWS paid $650 million to purchase Talen Energy’s Cumulus Data Assets, a 960-megawatt nuclear-powered data center on site at Talen’s Susquehanna, Pennsylvania, nuclear plant, with additional data centers planned — pending approval by the Nuclear Regulatory Agency… In addition to its purchase of the Cumulus data center, AWS will have access to nuclear energy as part of a 10-year Power Purchase Agreement (PPA) from the Susquehanna site.

Microsoft:
Last year, Constellation signed a deal giving Microsoft the rights to receive up to 35% of its power from nuclear sources in addition to its existing solar and wind purchases from Constellation for Microsoft’s Boydton, Va., data center. Microsoft has also signed a nuclear carbon credits deal with Ontario Power Generation for its operations in Canada.

The broader industry:
Many of the deals under discussion are with existing nuclear power providers for hyperscalars [large-scale datacenters] to access energy or to employ small module nuclear reactors (SMRs) with smaller carbon footprints that will be annexed to existing nuclear power plants. Nucor, Oklo, Rolls-Royce SMR, Westinghouse Electric, Moltex Energy, Terrestrial Energy, General Electric, Hitachi Nuclear Energy, and X-energy are among the roster of companies with SMRs under development to meet the growing needs of AI data centers…

One energy analyst does not expect nuclear SMRs to be operational until 2030, yet he and many others acknowledge the need for sustainable, carbon-free alternatives to electricity, wind, and solar is very pressing. “Today’s electric grids are struggling to keep up with demand, even as datacenter companies are planning huge new additions to their fleets to power generative AI applications. As a result, companies like Google, Amazon, and Microsoft are increasingly taking matters into their own hands and getting creative. They are now looking at on-site nuclear-based SMRs, and even fusion reactors,” says Peter Kelly-Detwiler, principal of Northbridge Energy Partners. “This global arms race for power arose pretty quickly, and it’s like nothing we have ever seen before.”

In the first quarter of 2024, what amounts to about half of the existing supply of data center megawattage in the US is under construction, according to real estate services firm CBRE. And 84% of that is already leased. Typically that rate had been about 50% the last few years — already notably higher than other real estate classes. “I’m astonished and impressed by the demand for facilities yet to be fully constructed,” CBRE Data Center Research Director Gordon Dolven told Sherwood.

That advanced interest means that despite the huge amount of construction, there’s still going to be a shortage of data centers to meet demand. In other words, data center vacancy rates are staying low and rents high. Nationwide the vacancy rates are near record lows of 3.7% and average asking rent for data centers was up 19% year over year, according to CBRE. It was up 42% in Northern Virginia, where many data centers are located. These sorts of price jumps are “unprecedented” compared with other types of real estate. For comparison, rents for industrial and logistics real estate, another hot asset class used in e-commerce, is expected to go up 8% this year.

Data centers have caused skyrocketing power demand in parts of London. Now, new housing construction could be banned for more than a decade in some neighborhoods of the UK’s biggest city because the electricity grid is reaching capacity, as first reported on by the Financial Times. The reason: too many data centers are taking up too much electricity and hogging available fiber optic cables. The Financial Times obtained multiple letters sent from the city’s government, the Greater London Authority (GLA), to developers. “Major new applicants to the distribution network… including housing developments, commercial premises and industrial activities will have to wait several years to receive new electricity connections,” said one note, according to the news outlet.

The GLA also confirmed the grid issue to Gizmodo in an email, and sent along text from one of the letters, which noted that for some areas utilities are saying “electricity connections will not be available for their sites until 2027 to 2030.” Though the Financial Times reported that at least one letter indicated making the necessary electric grid updates in London could take up until 2035. […] “Data centres use large quantities of electricity, the equivalent of towns or small cities, to power servers and ensure resilience in service,” one of the GLA letters seen by the Financial Times reportedly said. […] Developers are “still getting their heads round this, but our basic understanding is that developments of 25 units or more will be affected. Our understanding is that you just can’t build them,” said David O’Leary, policy director at the Home Builders Federation, a trade body. Combined, those sections of London contain about 5,000 homes and make up about 11% of the city’s housing supply, according the Financial Times.

Few big tech companies that are building and hiring across America bring that wealth with them when they set up in new communities. Instead, they hire armies of low-paid contractors, many of whom are not guaranteed a job from one month to the next; some of the contracting companies have a history of alleged mistreatment of workers. Nor do local governments share in the companies’ wealth; instead, the tech giants negotiate deals — the details protected by non-disclosure agreements — that exempt them from paying taxes that would fund schools, roads and fire departments….

Globally, by the end of 2020, there were nearly 600 “hyperscale” data centers, where a single company runs thousands of servers and rents out cloud space to customers. That’s more than double the number from 2015. Amazon, Google and Microsoft account for more than half of those hyperscale centers, making data centers one more field dominated by America’s richest and biggest companies… Google in March said it was “investing in America” with a plan to spend $7 billion across 19 states to build more data centers and offices. Microsoft said in April that it plans to build 50 to 100 data centers each year for the foreseeable future. Amazon recently got approval to build 1.75 million square feet of data-center space in Northern Virginia, beyond the 50 data centers it already operates there. Facebook said this year it would spend billions to expand data centers in Iowa, Georgia and Utah; in March it said it was adding an 11th building to its largest data-center facility in rural Prineville, Oregon…

Facebook has spent more than $2 billion expanding its operations in Prineville, but because of the tax incentives it negotiated with local officials, the company paid a total of just $119,403.42 in taxes to Crook County last year, according to the County Assessor’s list of top taxpayers. That’s less than half the taxes paid by Brasada Ranch, a local resort. And according to the Oregon Bureau of Labor and Industries, the data center has been the subject of numerous labor complaints… “I’ve spent way too much of my life watching city councils say, ‘We need a big tech company to show that we’re future-focused,'” says Sebastian Moss, the editor of Data Center Dynamics, which tracks the industry. Towns will give away tax breaks worth hundreds of millions of dollars, his reporting has found, and then express gratitude toward tech companies that have donated a few thousand computers — worth a fraction of the tax breaks — to their cash-strapped school systems. “I sometimes wonder if they’re preying on desperation, going to places that are struggling.”

Communities give up more than tax breaks when they welcome tech companies. Data centers use huge amounts of water to cool computer equipment, yet they’re being built in the drought-stricken American West.

The article cites Bureau of Labor Statistics showing that 373,300 Americans were working in data processing, hosting, and related services in June — up 52% from 10 years ago.

A data center can easily use up to 1.25 million gallons of water each day — and “More data centers are being built every day by some of America’s largest technology companies,” reports NBC News, “including Amazon, Microsoft and Google and used by millions of customers.”

Almost 40 percent of them are in the United States, and Amazon, Google and Microsoft account for more than half of the total. The U.S. also has at least 1,800 “colocation” data centers, warehouses filled with a variety of smaller companies’ server hardware that share the same cooling system, electricity and security, according to Data Center Map. They are typically smaller than hyperscale data centers but, research has shown, more resource intensive as they maintain a variety of computer systems operating at different levels of efficiency.

Many data center operators are drawn to water-starved regions in the West, in part due to the availability of solar and wind energy. Researchers at Virginia Tech estimate that one-fifth of data centers draw water from moderately to highly stressed watersheds, mostly in the Western United States, according to a paper published in April…

The growth in the industry shows no signs of slowing. The research company Gartner predicts that spending on global data center infrastructure will reach $200 billion this year, an increase of 6 percent from 2020, followed by 3-4 percent annually over the next three years. This growth comes at a time of record temperatures and drought in the United States, particularly in the West. “The typical data center uses about 3-5 million gallons of water per day — the same amount of water as a city of 30,000-50,000 people,” said Venkatesh Uddameri, professor and director of the Water Resources Center at Texas Tech University. Although these data centers have become much more energy and water efficient over the last decade, and don’t use as much water as other industries such as agriculture, this level of water use can still create potential competition with local communities over the water supply in areas where water is scarce, he added…

Sergio Loureiro, vice president of core operations for Microsoft, said that the company has pledged to be “water positive” by 2030, which means it plans to replenish more water than it consumes globally. This includes reducing the company’s water use and investing in community replenishment and conservation projects near where it builds facilities.

Amazon did not respond to requests for comment.