America’s electric grids are straining under the weight of Big Tech’s booming data centres, and officials are now eyeing a dramatic solution: cutting them off during power emergencies.
Texas has already made the first move. After a deadly 2021 winter blackout killed dozens, lawmakers passed a law requiring utilities to disconnect big energy users like data centres when electricity demand surges. The goal is to keep the lights on for homes and hospitals instead of servers.
The idea is spreading. In the mid-Atlantic grid, which covers 13 states and 65 million people, regulators are weighing similar rules. Other regions, including the Great Plains, are also looking at ways to rein in data centre demand that’s rising faster than new power plants can be built.
For tech giants, this is a problem. Data centers run the internet, power AI tools like ChatGPT, and process massive amounts of data around the clock. Any disruption to their power supply is a major risk.
Texas leads, others follow
Texas wants data centres as an economic boost, but their energy appetite is enormous. The new law orders utilities to set standards for disconnecting large users during extreme heat or cold, when the grid is most fragile.
Analysts say Texas won’t be alone. Since ChatGPT launched in late 2022, demand for AI services has exploded, requiring more data centres across the U.S. and putting new pressure on grids.
“Data centre flexibility will be expected, required, encouraged, mandated whatever it is,” said Michael Weber, an energy professor at the University of Texas.
Grids can’t keep up
Across Texas, the Great Plains, and the mid-Atlantic, grid operators are projecting sharp spikes in demand. Much of that growth comes from data centres as the U.S. races against China for AI dominance.
PJM Interconnection, the country’s largest grid operator, recently floated a proposal that would deny data centres guaranteed electricity during emergencies. The Southwest Power Pool, which serves 18 million people in states like Kansas and Oklahoma, says it must expand programs to cut power use by big customers.
This comes as household electricity bills nationwide climb at twice the rate of inflation. Consumer advocates warn that ordinary Americans are indirectly footing the bill for Big Tech’s massive energy needs.
“Data centre load has the potential to overwhelm the grid,” said Joe Bowring, who runs Monitoring Analytics, an independent watchdog for the mid-Atlantic grid.
Big Tech scrambles for solutions
Tech companies are trying to adapt. They’re making data centers more efficient and installing backup generators, usually powered by diesel. But they argue these generators weren’t meant to support the grid, only to cover their own outages.
The Data centres Coalition, which represents major players in the industry, is urging regulators to keep new rules flexible and to offer financial rewards for centres that voluntarily cut power use during crises.
Not everyone agrees. Some states fear tough rules could scare off billions in investment. Others say the better fix is to require data centres to build their own energy sources.
In Indiana, Google struck a deal for a $2 billion data centres in Fort Wayne. The company agreed to reduce electricity use during grid stress by delaying non-essential tasks. But consumer advocates say too many details are being kept secret to know if the deal really benefits ratepayers.
A new way to think about electricity
The debate signals a shift in how the U.S. manages electricity. Cutting off big users for just a few hours a year could save billions by avoiding the need for new power plants, experts say.
“Is it worth building 10 new power plants just to serve data centers for five hours a year?” asked Abe Silverman, an energy researcher at Johns Hopkins University. “Or is there a better way to do it?”
For now, the answer may depend on how much Big Tech is willing to bend and how much states are willing to push.
