Energy experts gathered in Raleigh this week to discuss how North Carolina’s energy grid — and ratepayers’ wallets — will handle the incoming wave of new data centers.
A single data center can require over half the output of a nuclear reactor to power. Meanwhile, a typical facility may only employ around 50 full-time employees once constructed and increase power bills for ratepayers statewide in the long run.
With the rise of AI and other internet services driving up data center demand, North Carolina utility commissioner Tommy Tucker and the rest of the commission must determine how much ratepayers will subsidize the required grid upgrades.
“I’m just thinking about the guy out there in rural North Carolina [who] needs a good-paying job, why wouldn’t we go after that load and kind of side step some of the data centers?” Tucker asked during the hearing.
In addition to transmission improvements and tax revenue, Lucas Fykes, energy policy director for the Data Center Coalition, said data centers play a role in the broader economy:
“As you bring in data centers to North Carolina, you’re also going to bring in other operations that depend on data centers and that depend on reducing that latency, that data transfer time,” Fykes said.
Building beyond the next five years
Commissioners will use the information presented during this week’s hearing to inform their decision on Duke Energy’s 2025 resource plan. That plan forecasted an unprecedented rise in energy demand, which would grow at eight times the rate it had during the preceding 15 years.
“In the rush to meet customer demand, utilities may resort to resource portfolios that do not cost-efficiently serve the load that actually materializes and may hinder some long-term resource planning goals,” said Jeffrey Bower, a consultant with Daymark Energy Advisers.
Bower said utilities run the risk of building too much new infrastructure to serve data center projects that never come to fruition. The utility might also choose to invest in quickly buildable generators, like natural gas turbines, but ultimately won’t serve at their full capacity for the duration of their useful lifetime.
Commissioner Karen Kemerait echoed those concerns.
“We also want to make sure that we're not over-forecasting and then overbuilding the system for load that doesn't actually show up,” Kemerait said.
Fykes responded that utilities and state regulators should review companies’ histories to see if they have a track record of delivering on past projects.
“Utilities commissions should be required to publicly disclose the key assumptions, data sources and validation processes underlying both [their] base forecasts and the supplemental inputs,” Fykes said.
Building on spec
The North Carolina Utilities Commission does not directly forecast load growth. Duke Energy submits an energy demand forecast during the biennial resource planning process. The challenge for the utility and state regulators is to account for speculative development requests.
Some data center developers are exploring sites in multiple states for the same project, inflating nationwide energy demand forecasts. A Sierra Club analysis of 23 utilities found that the prospective data centers in their pipelines would require as much energy as the entire country currently generates.
“Clearly, there's a lot of speculation in that overall pipeline,” said Jeremy Fisher, principal advisor for climate and energy at Sierra Club. “It's the lack of transparency about what underlies those forecasts that actually creates the real risk on our system.”
That risk, he said, is building too much energy infrastructure and overbilling ratepayers to pay for ir. If utilities don’t publish what’s in their pipelines, then it can be challenging to account for speculative requests made across multiple states.
Some states have already taken action to improve transparency. The Georgia Power Company files a quarterly report that details the number of data center customers in the pipeline and their cumulative power demand.
“That allows the commission to understand who's joining the pipeline, who's leaving, why are they leaving, how is it affecting the megawatts,” Bower said.
