Should Data Center Developers Prioritize Power Infrastructure First?

The skyrocketing demand for computational power driven by advancements in artificial intelligence (AI) is changing the landscape of data center development. Traditionally, factors such as proximity to labor pools, fiber optics connectivity, and land availability guided site selection. However, the increased power consumption necessary for AI workloads now necessitates a reevaluation of priorities. Power availability and infrastructure must take precedence to meet these evolving demands. The rapid expansion of AI technologies, particularly large language models and other compute-intensive applications, has led to an unprecedented strain on existing data center capacities. This shift underscores a growing urgency to revise traditional development strategies, emphasizing power infrastructure as a foundational element in the planning and construction of new data centers.

The Growing Power Needs of Advanced AI

In recent years, there has been an exponential rise in the demand for data center capacity due to advances in AI. AI servers, equipped with multiple Graphics Processing Units (GPUs), have a significantly higher power density than traditional servers, requiring up to four times more power per rack. This surge in power demand is straining local power grids and necessitating upgrades in transmission infrastructure. As AI applications continue to proliferate, the energy requirements for supporting these technologies are expected to escalate further, presenting significant challenges for power grid operators and electricity suppliers who must manage this volatile and intensifying load.

The challenges posed by this increased power consumption are multifaceted. Power grid operators and electricity suppliers must handle higher baseline power consumption and potential stability issues during peak usage periods. AI data centers often cluster in regions with favorable power costs and regulatory environments, creating hotspots of extreme power demand. These clusters exacerbate the strain on local power grids, complicating the ability of these regions to meet their power requirements. The concentration of AI data centers in specific locales can lead to localized grid instability, compelling utility companies to reconsider how they manage and distribute energy in these burgeoning tech hubs.

The Advocacy for a "Power First" Strategy

Sheldon Kimber, CEO of Intersect Power, is a vocal proponent of the "Power First" strategy in data center development. Kimber’s company specializes in clean energy projects and encounters the power challenges of data centers firsthand. Intersect Power maintains a portfolio that includes significant solar PV and storage capacity. Kimber argues for integrating scalable behind-the-meter solutions to meet data centers’ power needs. These solutions can alleviate grid strain by adding substantial on-site generation and storage capacity. Emphasizing power availability from the early stages of site selection can help mitigate the complications arising from the increased power demand of AI technologies.

Historically, data center developers have not prioritized power in their siting decisions. Instead, power availability was just one of many factors considered. The evolving demands of AI and the increased difficulty utilities face in providing the necessary power are prompting a reevaluation of this approach. Kimber has emphasized this shift for several years, encouraging developers to prioritize power availability from the beginning stages of site selection. His advocacy points to a broader industry trend that recognizes the critical importance of reliable and adequate power infrastructure to support advanced computational workloads.

Addressing the Scarcity of Power Infrastructure

The assumption that connection to the power grid would automatically ensure an adequate supply is no longer feasible. The scarcity of critical components like transformers and switchgear extends build and interconnection timelines. This scarcity makes it increasingly challenging for developers to secure necessary power connections, pushing them to reconsider their strategies. The lead times for obtaining such essential infrastructure components can significantly delay project timelines, making preemptive power planning a crucial step in the development of new data centers.

Many data center customers are starting to relocate to areas where power is not a limiting factor. One solution is siting data centers in regions with abundant renewable energy resources, such as the Texas Panhandle. Intersect Power has combined wind, solar, and battery storage projects in this area, providing green energy for a substantial majority of the time, supplemented by gas-fired generation. This level of sustainability is challenging to achieve in other parts of the grid. Such regions not only offer the potential for more stable and sustainable power supplies but also align with the growing corporate focus on environmental, social, and governance (ESG) criteria.

The Evolving Landscape of Data Center Development

Kimber’s insights spotlight broader industry trends at the intersection of electrification, decarbonization, and digitalization. The importance of energy storage for grid stability cannot be overstated. Green hydrogen’s potential for long-duration energy storage and the necessity for deep partnerships and expertise in energy markets are crucial elements for successfully deploying clean energy projects. Advances in energy storage technologies and innovative power management strategies are necessary to support the dynamic and expanding energy needs of modern data centers.

The emergence of these trends marks a significant shift in how data centers integrate with power infrastructure. By prioritizing power availability and infrastructure, developers can better navigate the complexities posed by AI’s growing computational power demands and align with broader sustainability goals. The ongoing transformation in energy production and consumption patterns within the tech industry requires a holistic approach, wherein power considerations are integral to initial site assessments and long-term operational strategies.

The Intersection of Data Centers and Clean Energy

Sheldon Kimber, CEO of Intersect Power, advocates for the "Power First" strategy in data center development. His company, specializing in clean energy projects, faces the power challenges of data centers directly. Intersect Power boasts an extensive portfolio featuring significant solar PV and storage capacity. Kimber supports integrating scalable behind-the-meter solutions to power data centers, which can reduce grid strain by adding substantial on-site generation and storage capacity. By focusing on power availability in the early stages of site selection, developers can mitigate issues arising from the increased power demand driven by AI technologies.

Traditionally, data center developers haven’t prioritized power in site selection, treating it as just one of many considerations. However, the growing demands of AI and the increasing challenges utilities face in providing necessary power are prompting a reevaluation. Kimber has long emphasized the need for this shift, urging developers to prioritize power availability from the outset. His advocacy highlights a broader industry trend recognizing the critical importance of reliable and adequate power infrastructure to support complex computational workloads.

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