Data center companies collaborating with US utilities on power demand growth

As US companies and utilities work to address the forecasts for rapidly growing power demand coming from data centers and artificial intelligence, all power generation resources will be needed and responsible collaboration with utilities will be a key part of maintaining reliability, power market experts said.

"It's going to take a mix of everything to really reach the [power] capacity that we need as a nation," Jessica Johnson, director of offtake at CleanCapital, said during a June 4 panel discussion at the American Council on Renewable Energy's Finance Forum held in New York City.

Growing power demand from AI activity tied to data centers has been a major new market for utilities, with S&P Global Market Intelligence 451 Research forecasting 59,000 MW of incremental data center power demand by 2029.

There is a wide range of power demand forecasts within the US electricity industry, and while there is some uncertainty around the ultimate level of future power demand, the industry is preparing for faster growth than seen in decades.

This has resulted in multiple deals through which data center companies and AI developers have reached agreements to acquire power from nuclear power plants, with at least one deal involving the restart of an idled nuclear plant.

As recently as June 3, Constellation and Meta signed a 20-year power purchase agreement for output from the 1,092-MW Clinton Clean Energy Center in Illinois. Starting in June of 2027, the agreement will facilitate relicensing and continued operation of the power plant for another two decades after the state's zero emission credit program expires. The deal also increases Clinton's power output by 30 MW through plant uprates, according to a statement.

Mike Kramer, vice president of data economy strategy at Constellation said during the ACORE event that the potential of losing the production tax credit as part of legislation recently passed by the House creates revenue uncertainty for the Clinton plant. The deal with Meta reduces some of that uncertainty, he said.

Additionally, "uprating existing units is one of the fastest ways to get new megawatts on the grid and being certain that the existing plant is going to be around for 20 years allows for economic investment in the incremental 30 MW," Kramer said.

Working with utilities

There is a sense that the country is in an emergency situation regarding power supply and the "grid could fall off a precipice, and I think that is not true," Will Conkling, head of data center energy for the Americas at Google, said.

The country is in a moment of growth and that is "a positive thing," he said, but there is a notion that Amazon, Google and data centers are "sucking up all the energy and leaving the power grid on its own."

But Google, Amazon and others are "leaning in hard with utilities on how to build new sources of power generation, how to be more efficient and flexible" allowing power demand to grow without reliability issues, Conkling said.

Pressed by the moderator about potential power supply shortages, Conkling responded that utilities are taking a conservative approach to serving new loads.

"Whenever we talk to utilities about growth today, they say we can give you this much and that is where we have to stop because it is the reliable point. Utilities are being responsible by saying we can only serve you this much before you have to come to the table with solutions too," he said.

In the case of Amazon, those solutions can include investing in small modular nuclear reactors, or SMRs.

Craig Sundstrom, head of energy and sustainability public policy for the Americas at Amazon, said his company has invested $500 in X Energy to develop 5 GW of SMRs in grids where Amazon operates.

The company is also working with Dominion Energy in northern Virginia on the advanced nuclear technology.

"We are putting in the capital, we are working with those teams. We recognize it may take a number of years to get through all the permitting and licensing, but we are very much committed," Sundstrom said.