Data centers powering artificial intelligence could use more electricity than entire cities
An Amazon Web Services data center in Ashburn, Virginia, US, on Sunday, July 28, 2024.
Nathan Howard | Bloomberg | Getty Images
The power needs of artificial intelligence and cloud computing are growing so large that individual data center campuses could soon use more electricity than some cities, and even entire U.S. states, according to companies developing the facilities.
The electricity consumption of data centers has exploded along with their increasingly critical role in the economy in the past 10 years, housing servers that power the applications businesses and consumers rely on for daily tasks.
Now, with the advent of artificial intelligence, data centers are growing so large that finding enough power to drive them and enough suitable land 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 about twice the residential electricity consumption of the Pittsburgh area last year.
Technology companies are in a “race of a lifetime to global dominance” in artificial intelligence, said Ali Fenn, president of Lancium, a company that secures land and power for data centers in Texas. “It’s frankly about national security and economic security,” she said. “They’re going to keep spending” because there’s no more profitable place to deploy capital.
Renewable energy alone won’t be sufficient to meet their power needs. Natural gas will have to play a role, developers say, which will slow progress toward meeting carbon dioxide emissions targets.
(See here for which stocks are helping to fix the nation’s power grid.)
Regardless of where the power comes from, data centers are now at a scale where they have started “tapping out against the existing utility infrastructure,” said Nat Sahlstrom, chief energy officer at Tract, a Denver-based company that secures land, infrastructure and power resources for such facilities.
And “the funnel of available of land in this country that’s industrial zone land that can fit the data center use case — it’s becoming more and more constrained,” said Sahlstrom, who previously led Amazon’s energy, water and sustainability teams.
Beyond Virginia
As land and power grow more limited, data centers are expanding into new markets outside the long-established global hub in northern Virginia, Sahlstrom said. The electric grid that serves Virginia is facing looming reliability problems. Power demand is expected to surge, while supply is falling due to the retirement of coal- and some natural gas-powered plants.
Tract, for example, has assembled more than 23,000 acres of land for data center development across the U.S., with large holdings in Maricopa County, Arizona — home to Phoenix — and Storey County, Nevada, near Reno.
Tract recently bought almost 2,100 acres in Buckeye, Arizona with plans to develop the land into one of the largest data center campuses in the country. The privately-held company is working with utilities to secure 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 peak 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 people, according to a CNBC analysis using data from the Department of Energy and Census Bureau.
A data center campus that size would use more power in one year than retail electric sales in Alaska, Rhode Island or Vermont, according to Department of Energy data.
A gigawatt-size data center campus running at even the lower end of peak demand is still roughly comparable to about 330,000 households, or a city of more than 800,000 people — about the population of San Francisco.
The average size of individual data centers operated by the major tech companies is currently around 40 megawatts, but a growing pipeline of campuses of 250 megawatts or more is coming, according to data from the Boston Consulting Group.
The U.S. is expected 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 analysis.
“Certainly the average size of the data centers is increasing at a rapid pace from now to 2030,” said Vivian Lee, managing director and partner at BCG.
Community impact
Texas has become an increasingly attractive market due to a less burdensome regulatory environment and abundant energy resources that are more easily tailored to specific sites, Sahlstrom said. “Texas is probably the world’s best experiment lab to deploy your own power solution,” the energy officer said.
Houston-based Lancium set up shop in 2017 with the idea of bringing large electric loads closer to abundant renewable energy resources in west and central Texas, said Fenn, the company’s president. Originally focused on cryptocurrency mining, Lancium later shifted its focus to providing power for artificial intelligence with the advent of ChatGPT in late 2022.
Today, Lancium has five data center campuses in various 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 will 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 involve scaling them up to between three and five gigawatts, Fenn said.
For data centers that size, developers have to ensure that electricity costs in neighboring communities don’t rise as a consequence and that grid reliability is maintained, Fenn said. Pairing such facilities with new power generation is crucial, she said.
“The data centers have to partner with utilities, the system operators, the communities, to really establish that these things are assets to the grid and not liabilities to the grid,” Fenn said. “Nobody’s going to keep approving” such developments if they push up residential and commercial electric rates.
Renewables not enough
Data center campuses run by publicly-traded Equinix are rising to several hundred megawatts from 100- to 200 megawatts, said Jon Lin, general manager for data center services at the company. Equinix is one of the largest data center operators in the world with 260 facilities spread across 72 metropolitan areas in the U.S. and abroad.
Developers prefer carbon-free renewable energy, but they also see solar and wind alone as unable to meet current demand due to their reliance on changing weather conditions.
Some of the most critical workloads for the world’s economy, such as financial exchanges, run at data centers operated by Equinix, Lin said. Equinix’s data 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 still incredibly important for these data centers, and so doing that solely off of local renewables is candidly just not an option,” 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 nuclear in search of more reliable sources of electricity. Microsoft is supporting the restart of the Three Mile Island nuclear plant outside Harrisburg, Pennsylvania through a power purchase agreement. Amazon and Alphabet’s Google are investing in small nuclear reactors.
But building new nuclear reactors is expensive and fraught with delays. Two new reactors in Georgia recently came online years behind schedule 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 said. Gas is the main, short-term power source providing the reliability these facilities require, Boston Consulting Group’s Lee said.
Investments could be made in new gas generation that adds carbon capture and battery storage technology over time to mitigate the environmental impact, Lee said.
The industry hopes that gas demand will taper off as renewables expand, battery storage costs come down and AI helps data centers operate more efficiently, Fenn said. But in the near term, there’s no question that data center expansion is disrupting technology companies’ emissions targets, she said.
“Hopefully, it’s a short term side step,” Fenn said of stepped-up natural gas usage. “What I’m seeing amongst our data center partners, our hyperscale conversations, is we cannot let this have an adverse effect on the environmental goals.”
Note: CNBC analysis assumes 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. Analysis uses national averages for household electricity consumption from EIA and household size from Census Bureau.
This week on Electrek’s Wheel-E podcast, we discuss the most popular news stories from the world of electric bikes and other nontraditional electric vehicles. This time, that includes a merger between Electric Bike Company and Integral Electrics, California looking to clamp down further on Sur Ron hooligans, a Super73 recall, Cowboy’s production move, a tour inside Bafang’s factory in China, and more.
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NIU, best known as a leader in the electric moped market, has expanded considerably over the last few years. In addition to offering a hot-selling new electric dirt bike and showing off concepts for electric ATVs, the company is now unveiling an electric microcar known as the NIUMM 500.
Still in its prototype stage, the two-seater NIUMM 500 electric microcar is designed to fit into L6e category of light quadricycles in Europe. As a quadricycle, these vehicles are technically not “cars” in the traditional sense (or in the legal sense), and thus have their own set of regulations that help streamline their path to production. Other popular microcars, such as the Citroen Ami, have taken a similar path and reached success with over 30,000 units sold.
With a target price of €8,000 (approximately US $8,300), the NIUMM 500 is intended to fill that niche role of a comfortable, weather-protected urban commuter, going beyond a typical moped or motorcycle with the advantages of locking storage and the ultimate achievement of staying dry in the rain.
In order to qualify as an L6e vehicle though, there are certain restrictions such as speed and power that prevent the NIUMM 500 from laying down the fastest lap times. A top speed of 45 km/h (28 mph) keeps the microcar city-oriented, though you could probably tell by looking that this isn’t a highway vehicle.
In some countries, light quadricycles don’t even require a full car driver’s license, instead allowing the operator to hold a more easily-obtainable moped permit.
Despite the speed limitation, the little electric microcar has a lot going for it. The traditional steering wheel control and two-pedal drive setup will feel familiar to seasoned car drivers, yet the vehicle offers a more moped-like parking experience by taking up a mere fraction of a parking spot. The narrow size helps squeeze through tight city streets, though you likely won’t be lane splitting quite like a moped.
Back on the car-like side of things, electric locks and power windows come standard (including a power rear windshield), as does electric heating. Optional add-ons include a sun roof and air conditioning. There’s a decently large storage area behind the two seats, and another small storage area in front of the passenger seat.
And in another nod to its hybrid design, halfway between a moped and a car, the NIUMM 500 can even be outfitted with removable batteries (straight from NIU’s NQiX electric mopeds). The removable battery version allows apartment dwellers or others without access to street-level parking to still own and charge their own microcar. Just like how I charge my own NIU batteries at home, owners can simply carry the batteries up the elevator and charge them in their apartment.
For those with charging access though, there’s a fixed battery version with a larger 7 kWh capacity. It gets an impressive 118 km (73 miles) of range, compared to the removable battery version’s 60 km (37 miles) of range.
Both appear to feature the same 5 kW motor with a peak output of 10 kW – also the same drivetrain from the NIU NQiX electric moped.
NIU is currently showing off the new vehicle at the Motorrad show in Dortmund, Germany.
There’s no word yet on if or when the NIUMM 500 will see production, but based on conversations with company insiders, it sounds like NIU is fairly serious about the microcar’s future.
Here’s to hoping it sees the road soon, and that they can keep that target price in check on the way there.
Electrek’s Take
Yes, I’m all in on this!
I LOVE electric microcars. Give me a tiny car, a golf cart, whatever you want to call it, and I’ll take it. For city commuters, 25 mph is often sufficient, and since many people don’t feel safe on a scooter, these types of vehicles fit the bill as lighter and more efficient alternatives to a car that still carry some benefits of a scooter or moped.
I tested out Wink Motors’ vehicles in NYC a couple of years ago and got around the city just fine with a top speed of 25 mph, so I think these could even work in the US. But of course Europe is the primary target here thanks to their more conducive quadricycle laws.
If anyone at NIU is reading this, I will travel to review!
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Renewables increased their output by almost 10% and provided nearly a quarter of US electrical generation in 2024, according to newly released US Energy Information Administration (EIA) data.
Solar was still No 1
Solar remained the US’s fastest-growing source of electricity in 2024. Utility-scale and “estimated” small-scale (e.g., rooftop) solar combined increased by 26.9% in 2024 compared to the same period in 2023, according to the SUN DAY Campaign, which reviewed EIA’s “Electric Power Monthly” report data.
Utility-scale solar thermal and photovoltaic expanded by 32%, while small-scale solar increased by 15.3%. Together, solar was nearly 7% (6.91%) of total US electrical generation for the year.
In December alone, electrical generation by utility-scale solar expanded by 42% compared to December 2023.
Small-scale solar (systems <1 MW) accounted for 27.9% of all solar generation and provided 1.9% of the US electricity supply in 2024. In fact, small-scale solar PV generates over five times more electricity than utility-scale geothermal.
2024 renewables milestones
The electrical output of US wind farms in 2024 grew by 7.7% year-over-year. Wind remains the largest source of electrical generation among renewable energy sources, accounting for 10.3% of the US total.
Wind and solar combined provided more than 17.2% of US electrical generation during 2024. The mix of all renewables – wind, solar, hydropower, biomass, geothermal – provided 24.2% of total US electricity production in 2024 compared to 23.2% of electrical output a year earlier.
Between January and December, electrical generation by renewables grew by 9.6% compared to the same period the year before – nearly three times the growth rate of natural gas (3.3%) and over 10 times that of nuclear power (0.9%).
In December alone, electrical generation by renewables grew by 10.1% compared to December 2023.
Wind and solar together produced 15.9% more electricity than coal and came close to matching nuclear power’s share of total generation (17.2% vs. 17.8%).
The mix of renewables reinforced their position as the second largest source of electrical generation, behind only natural gas.
“Renewable energy sources now provide a quarter of the nation’s electricity,” said the SUN DAY Campaign’s executive director, Ken Bossong. “Consequently, the rash efforts of the Trump Administration to undermine wind, solar, and other renewables will have serious negative consequences for the nation’s electricity supply and the economy.”
Read more: Renewables provided 90% of new US capacity in 2024 – FERC
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