What Needs to be Done to Solve Modern Data Centre Energy Requirements

The proliferation of digital technologies and the continued immergence of artificial intelligence (AI) has thrust data centres into the spotlight as linchpins of modern business infrastructure. They support critical operations across industries. However, as the interest in generative AI has triggered a race to develop technology, demand for high-density data centres has led to significantly increased electricity consumption requirements. 

An action plan for all

In the US, there has been a groundbreaking AI Action Plan that encompasses more than ninety federal policy actions and outlines the Government’s comprehensive and aggressive approach to securing a “dominance in artificial intelligence.” The plan sets forth a multiphase strategy to stabilise, refine, and expand the grid, prioritising reliable, dispatchable power sources and advanced grid management technologies. And for good reason, it is felt that data centres are instrumental in supporting a country’s digital future.

There was a similar set of landmark US-UK agreements signed closer to home during  President Donald Trump’s recent state visit designed to accelerate deployment of advanced nuclear technologies in the UK to support the growing data centre estate. As part of a broader Technology Prosperity Deal, the two countries committed to developing secure AI infrastructure, including high-performance computing and data centres that will increasingly be powered by nuclear. 

This is an encouraging move. There is no doubt that companies developing data centres or related energy or manufacturing facilities could benefit from government support, whether in expediting permits, reducing regulatory requirements, or the availability of grants. However, this is not going to happen overnight. There still requires changes to certain existing regulations. Such amendments can be lengthy. Because of this, industry stakeholders may wish to engage with regulators directly with an aim to facilitate clearer, predictable, and advantageous regulatory requirements.

New connections

Of course, some areas of the world are proving more popular as a location for the new breed of super AI data centres than others. Texas in the US is one. There, the operator of the State's electrical grid – ERCOT – says it has received requests equal to 572GW for three thousand new connections to the grid from data centre providers. 

Most of the new generation capacity is expected to come from the build-out of solar and battery storage systems (BESS), with solar expected to more than double between 2024 and 2029 and BESS projected to triple during the same period. To meet the growing demand, ERCOT has added an impressive 8.8GW of renewable energy to the grid. 

The importance of demand management 

To prevent a systemwide blackout in an emergency, it will be important that the grid uses a process called “load-shedding,” to ensure data centres and other non-critical large loads help rather than hinder reliability. Such a process allows utilities to disconnect eligible loads during firm load shed events and mandates the installation of shutoff equipment known as a “kill switch” as a condition of grid interconnection.

Such a programme already works well in Texas and is subject to a minimum 24-hour notice period and off-limits to any large-load customer that curtails in response to the wholesale price of electricity. The advance warning period is and mustn’t be overlooked.

Opportunities and challenges for the energy industry

It is no secret that data centres are projected to account for a substantial part of new electricity demand in the years to come. This growth presents both opportunities and challenges for energy providers, including the need to manage increased demand, invest in infrastructure, and adapt pricing strategies. Uncertainty surrounding the timing and location of data centre development further complicates planning. Although the recent deal to fast-track licensing and cooperation between the US Nuclear Regulatory Commission (NRC) and UK Office for Nuclear Regulation (ONR) mentioned above does soften the blow. In many ways, the stage is now set for the rapid deployment of any required new nuclear solutions for powering distributed infrastructure.

The need to actively adapt

As more data centres are built and the amount of power they require grows, power supply is becoming an issue in markets that have traditionally attracted clusters of data centres. There is a real concern that the energy industry may be unable to generate sufficient power. Because of this, it is being forced to actively adapt through infrastructure investments, renewable energy initiatives, demand management strategies, and innovative pricing models to meet these demands. This multifaceted approach aims to ensure stability in energy supply while supporting sustainability goals.

One interesting side bar. Due to grid stability concerns, we are seeing data centres dedicated to training AI models increasingly being built in more remote locations where power is still abundant and grids are less strained. However, this is just simply transposing the issue as given the lack of adequate power transmission infrastructure in these locations, power supply is now also becoming an issue there as demand grows.