By Laila Kearney
NEW YORK (Reuters) – U.S. electrical systems are not expanding fast enough to meet the fast-growing energy needs of technology such as generative AI, prompting data center companies to sometimes bypass utilities, executives said at an energy conference this week.
Layers of regulation, citation and permitting processes, and frequent legal battles from environmental and community groups have kept new energy projects from connecting to the grid and threatened the profits of traditional energy companies such as regulated electric utilities.
“Regulation and licensing within the United States is terrible,” Brad Stansberry, who leads the financial management practice for the energy and utilities sector at services firm KPMG, said Wednesday at the AI: Powering the New Energy Era summit in Washington.
The delays have led data center companies to bypass utilities and contract directly with energy producers or build their own energy supplies.
Data center developer Aligned, one of the largest companies of its kind with a capacity of 2.5 gigawatts, is rushing to power after several years of focusing on buying land for its operations.
“We always assumed there would be power, but that assumption was obviously woefully inaccurate, so now we’re looking at where the power lies,” said Phill Lawson-Shanks, Chief Innovation Officer at Aligned.
Among its electricity considerations, Aligned is considering using small modular reactors, or a type of nuclear power system currently under development in the United States, to power some of its projects, and is working with utilities on projects where possible , says Lawson- said Shanks. “Where that is not possible, we will have to have them behind the meter,” he added.
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Energy companies also lamented the limitations in meeting the electricity needs of companies that support chatbots like ChatGPT, which require about ten times as much energy as a Google (NASDAQ:) search, and other forms of artificial intelligence.
“It’s hard to get anything built quickly,” said Michael Keyser, head of the National Renewables Cooperative Organization, which represents about two dozen generation and transmission cooperatives, along with distribution cooperatives. “So I think this is a natural consequence of why you’re seeing data centers and technology companies now pursuing their own energy purchasing.”
Regulated energy companies cited the slow regulatory process to expand their systems, especially with demand for renewable energy such as solar and wind, while also hoping that the surge in demand from big tech would help their businesses grow.
“Riding that bus actually makes it easier for us,” said Brian Bird, head of electric utility and company NorthWestern Energy, referring to technology companies leading the way in energy generation.
