Back in the days of sailing ships, the captain had a choice when a storm became so severe that it threatened to sink the ship. He could throw the cargo overboard, lightening the ship enough to save it and its crew for another day. But doing that would ruin any chance of profiting from the voyage.
It was a hard decision then, and an equally hard decision is facing operators of U. S. power grids as they try to cope with increasing demand for reliable power from data centers, many of which are being built to power the next generation of artificial-intelligence (AI) technologies.
An Associated Press report by Marc Levy reveals that one option many grid operators are considering is to write into their agreements with new data centers an option to cut off power to them in emergencies.
Texas, which is served by a power grid which is largely independent of the rest of the country's networks, recently passed a law that prescribes situations in which the grid operator can disconnect big electricity users such as semiconductor-fab plants and data centers. This is not an entirely new practice. For some years, large utility customers have taken the option of being disconnected in emergencies such as extremely hot or cold days that put a peak strain on the grid. Typically they receive a discount for normal power usage when they allow the grid operator to have that option.
But according to Levy, the practice is being considered in other parts of the country as well. A large grid operator called PJM Interconnection serves 65 million customers in the mid-Atlantic region. They have proposed a rule similar to the one adopted in Texas for their data-center customers. But an organization called the Digital Power Network, which includes data-center operators and bitcoin miners, another big energy user class, complained that if PJM adopts this policy, it may scare off future investment in data centers and cause them to flee to other parts of the U. S.
Another concern is rising electricity prices, which some attribute to the increased demand by data centers. These prices are being borne by the average consumer, who in effect is subsidizing the gargantuan power needs of data centers, which typically pay less than residential consumers per kilowatt anyway.
In a way, this issue is just an extreme example of a problem that power-grid operators have faced since there were power grids: how to handle peak loads. Historically, electricity has to be generated at the same time it's consumed, although there is some progress recently in battery storage of electricity, though not enough to make much of a large-scale difference yet. This immediacy requires a power grid to have enough generating capacity to supply the peak load—the most electricity they will ever have to supply on the hottest (or coldest) day under worst-case situations.
The problem with peak loads from an economic view is that many of those generating facilities sit idle most of the time, not producing a return on their investment. So it's always been a tradeoff between taking a chance that your grid will manage the peak load and scrimping on capacity, versus spending enough to make sure you have margin even with the worst peak load imaginable, but having a lot of useless generators and network stuff on your hands most of the time.
When the electric utility business was highly regulated and companies had a guaranteed rate of return, they could build excess capacity without being punished by the market. But since the deregulatory era of the 1970s, and especially in hyper-free-market environments such as Texas, the grids no longer have this luxury. This is one reason why load-shedding (the practice of cutting off certain big customers in emergencies) looks so attractive now: instead of building excess capacity, the grid operator can simply throw some switches and pull through an emergency while ticking off only a few big customers, rather than cutting it off to everybody, including the old ladies who might freeze or die of heat exhaustion without power.
Understandably, the data-center operators are upset. They don't want to spend the money on backup generators that they would rather the grid operators spend. But the semiconductor manufacturers have learned how to do this already, and build costs for giant emergency-generation facilities into their budgets from the start.
Some data-center operators are starting to build their own backup generators so that they can agree to go off-grid in emergencies without interrupting their operations. After all, it's a lot easier to restart a data center after a shutdown than a semiconductor plant, which could suffer extreme damage after a disorganized shutdown that could put it out of action for months and cost many millions of dollars.
Compared to plants that make real stuff, data centers can easily offload work to other centers in different parts of the country, or even outside the U. S. So if there is a regional power emergency, and a global operation such as Google has to shut down one data center, they have plenty more to take up the slack.
It looks to me like the data centers don't have much of a rhetorical leg to stand on when they argue that they shouldn't be subjected to load-shedding agreements like many other large power users tolerate already. We are probably seeing the usual huffing and puffing that accompanies an industry-wide shift to a policy that makes sense for consumers, power-grid operators, and even the data centers themselves, if they agree to take more responsibility for their own power in emergencies.
If electricity gets expensive enough, data-center operators will have an incentive to figure out how to do what they do more efficiently. There's plenty of low-power technology out there developed for the Internet of Things and personal electronics. We all want cheap electricity, but if it's too cheap it leads to inefficiencies that are wasteful on a large scale. Parts of California in the 1970s had water bills that were practically indistinguishable from zero. When I moved out there to school in 1972 from water-conscious Texas, I was amazed to see shopkeepers cleaning their sidewalks every morning, not with a broom, or a leafblower, but with a spray hose, washing down the whole sidewalk.
I don't think they do that anymore, and I don't think we should guarantee all data centers that they'll never lose power in an emergency either.
Sources: Marc Levy's article "US electric grids under pressure from power-hungry data centers" appeared on the Associated Press website on Sept. 13 at https://apnews.com/article/big-tech-data-centers-electricity-energy-power-texas-pennsylvania-46b42f141d0301d4c59314cc90e3eab5.
