The rapid expansion of artificial intelligence is driving a huge increase in demand for electricity, but tech companies are scrambling to build the data centers needed to support it.
One bottleneck for data center expansion is the need to secure large quantities of electricity. Years of flat growth, the closure of legacy power stations, and aging infrastructure limit the capacity of the existing grid to meet this demand. Overlapping jurisdictions, onerous permitting requirements, and NIMBYism are all barriers to expanding the supply of power.
Why does this matter?
- The electric grid is increasingly under strain, resulting in higher prices and less reliable power.
- The need for increased electric capacity is urgent and will likely have to be met by an “all of the above” approach to generation and expansion of the transmission system.
- Renewable power is a viable option for powering data centers, whether through on-site generation and energy storage, the purchase of Renewable Energy Credits, or the use of physical or virtual power purchase agreements.
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