Data centers used for artificial intelligence and other aspects of the online world are likely to have a significant impact on Pennsylvania’s energy economy in coming years, according to the head of the state Public Utility Commission.
The PUC unanimously approved Chairperson Stephen DeFrank’s motion Thursday to hold a hearing April 24 on how to protect consumers, while harnessing the opportunities for economic growth, technological advancement, electricity market stability and bolstering national security.
“Balancing concerns like these is one of the primary mandates of the commission,” DeFrank said in the motion, adding that it would be required to provide non-discriminatory access to public utilities, while guarding against undue burdens and costs for existing customers and risk to electric utilities.
At least two large data center projects are in the works that have the potential to affect Pennsylvania’s electrical grid.
Constellation Energy announced in September a $1.6 billion investment to restart its nuclear power plant at Three Mile Island in Dauphin County. The deal wouldprovide carbon-free electricity to supply power for software giant Microsoft’s AI data centers in the region.
This month, Amazon Web Services announced the $650 million purchase of a data center with 1,200 acres of land adjacent to the Susquehanna Steam Electric Station nuclear power plant near Berwick, Luzerne County. AWS plans to build a data center campus that would consume as much energy as 900,000 homes.
Jon Gordon, wholesale markets manager for Advanced Energy United, an association of clean energy providers, told the Capital-Star the prospect of many large data centers being located in a region introduces new variables into the economy.
“Forecasting energy demand used to be relatively straightforward. Demand grew in a straight line with economic activity,” he said.
The demand from data centers could affect electricity supply and reliability when added to already increased demand from electric vehicles and heating, the retirement of fossil-fuel generating stations, the push to increase the amount of carbon-neutral energy being used, and delays in getting clean energy generation on line, Gordon said.
“We don’t know how speculative these projects are and how many are actually going to come online,” he said. “In the energy industry, we need to figure out which ones are actually going to get built.”
DeFrank noted such projects may require upgrades to electrical distribution systems to connect to the grid. The PUC must ensure that if utilities pay for improvements to serve projects that ultimately do not materialize that current ratepayers are not left with the bill.
“In such cases, questions may arise about who will ultimately bear these stranded costs. Providing certainty may mean requiring deposits or other finance security, minimum contract terms, or some sort of breakage or termination fee for loads that decide not to proceed with construction,” DeFrank’s motion said.
The PUC also needs to provide large electricity users with certainty regarding how long it will take and how much it will cost to connect to the grid. Users willing to pay for and build system upgrades may be able to connect faster. But utilities may take a conservative approach to large projects, DeFrank said.
Next month’s hearing will be in Harrisburg and include panels representing electricity distribution companies, industrial customers and advocates.
