Nov 21, 2024
The growing demand for digital information has made data centers major global energy consumers.
Increasing demand for digital information has made data centers among the largest consumers of energy in the world. And thanks to power-hungry artificial intelligence, data centers require even more energy on a day-to-day basis. They may not be getting that energy from behind-the-meter deals after a recent decision handed down by the Federal Energy Regulatory Commission (FERC).
The commission was asked to approve a plan allowing Amazon to increase the amount of power it purchased from a nuclear power plant located adjacent to one of its data centers. If approved, the Susquehanna power plant, owned by Talen Energy Corp, would have supplied the data center before energy was released to the grid.
That is not going to happen thanks to a 2-1 vote among commissioners. In voting against the plan, the FERC said it would set a dangerous precedent that could give data centers priority to the extent of disrupting power availability to everyone in front of the meter.
Building Next to Power Plants
Building data centers next to power plants is a novel approach designed to ensure that the center's servers always have enough power to keep things up and running. Building adjacently and connecting directly to the power plant gives a data center operator access to energy before it enters the grid. Such behind-the-meter deals do keep the nation's data centers up in running. But at what cost?
Amazon was looking for such assurances when it paid Talen some $650 million to build a 960-mw data center or campus next to the Susquehanna nuclear power facility in Pennsylvania. The online retail giant also agreed to a long-term power purchase contract. What happens to that deal remains to be seen.
Interestingly, the Amazon-Talen deal was not the first such deal of its kind. Other power companies and data center operators have entered similar deals in recent years. Earlier this year, American Electric Power and Exelon filed a complaint against another behind-the-meter deal they argued would threaten grid reliability and increased rates for their retail customers.
Power Generation Not Keeping Up
The very idea that a data center operator would seek out the behind-the-meter deal suggests a very obvious problem we need to address quickly: power generation is not keeping up with consumption. Digital technologies are advancing at an alarming rate, and we simply are not prepared – and have not been for quite some time.
Insuring data centers have enough power to operate is obviously essential. We live in a digital world from which there is no escape at this point. But behind-the-meter deals may not be the wisest way to do so. Instead, increasing power generation capacity guarantees that everyone has enough energy – data centers included.
Every Available Source
If we hope to keep technologies like deep learning and AI at the forefront of the digital transformation, we have no choice but to increase power generation significantly. And to do that, we need to embrace every available source. We need to continue exploring better ways to use fossil fuels. We need to continue to make nuclear energy ever safer. We need to continue developing renewable energy to whatever extent possible.
For now, regulators seem to have indicated that behind-the-meter deals are not going to get a rubber stamp. If any such deals threaten grid reliability and equitable energy distribution, the FERC will need a lot of convincing to get them done. That could be good or bad news depending on how you look at it. In the long term, keeping every customer on the meter is probably a better way to go.
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