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Data centers have hiked electricity prices on the public by $23B

fortune.com

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Re: Data centers have hiked electricity prices on the public by $23B

#41

Post by butvacuum »

TurdF3rguson wrote: post #37
strictnein wrote: post #18

Earlier quoted context omitted.

It doesn't even match what's in the article. > "concluded that expected power demand from data centers was _a_ primary reason for $23 billion in customer price increases " Also, it's weird that he describes PJM as "the organization that monitors the PJM market" when they describe themselves as "a regional transmission organization (RTO) that coordinates the movement of wholesale electricity" [0]. So are they monitors…

Right, you can't point to a year where price increases didn't happen, so "a primary reason" becomes meaningless. It was going to happen for other reasons if it didn't happen for this one.

by my research, everything has scaled almost linearly with population. But- there was a huge, undeniable, dip in cost of a kw/h of power when lighting started focusing on CFLs and LEDs. Grid expansion stalled, and now people are upset since it started growing again

Re: Data centers have hiked electricity prices on the public by $23B

#42

Post by bakies »

MaxHoppersGhost wrote: post #39

What is the increase in jobs/GDP for those communities that have paid more in electricity? A lot of these data centers are built in places with declining population and zero economic prospects for locals within their communities so they're a huge boon.

None? There's like 12 jobs per datacenter and the revenue goes to the Valley, mostly. The utilities get some profit but I doubt that money stays very local either.

Re: Data centers have hiked electricity prices on the public by $23B

#43

Post by bpodgursky »

Hnrobert42 wrote: post #27
bpodgursky wrote: post #26

Every tech company building out datacenters would pay in a heartbeat to add commensurate power to the grid. The cost is not an objection. The problem is, there are insane and dumb regulatory barriers to adding power plants or interconnects. THESE ARE THE SAME PROBLEMS FACTORIES FACE WHEN RESHORING PRODUCTION, you should treat datacenters as the face of reindustrialization. Instead of complaining about using resources…

> Every tech company building out datacenters would pay in a heartbeat to add commensurate power to the grid. The cost is not an objection. Yeah. I'm going to need a source on this claim.

Elon (in)famously put gas turbines on pickup trucks to power the Colossus 1/2 datacenters because connecting to the grid was incredibly slow and there was limited supply. And got sued to remove them.

Absent regulation, every operator would happily do the same thing to make the problem go away.

Re: Data centers have hiked electricity prices on the public by $23B

#44

Post by daedrdev »

m-hodges wrote: post #4

> But what if the power company needs to upgrade the substation to handle the increased needs of the data center? Or secure additional sources of electricity? In these cases, the investments are part of the electricity grid that everyone uses. These costs will likely be shared among all customers. Okay but this is a policy choice. It doesn’t have to be that way.

In the US this isn't even true. The costs of grid upgrades are paid new capacity up front, which actually means there is a queue for grid connections twice the US total production, with no costs to ongoing customers.

Re: Data centers have hiked electricity prices on the public by $23B

#45

Post by kbenson »

bpodgursky wrote: post #26

Every tech company building out datacenters would pay in a heartbeat to add commensurate power to the grid. The cost is not an objection. The problem is, there are insane and dumb regulatory barriers to adding power plants or interconnects. THESE ARE THE SAME PROBLEMS FACTORIES FACE WHEN RESHORING PRODUCTION, you should treat datacenters as the face of reindustrialization. Instead of complaining about using resources…

Given that datacenters seem to much more manpower efficient, that seems like a poor trade, to the point it might not be worth viewing them similarly. I'm seeing info reporting about 1 job per 5000 square feet of a datacenter after completion, and 1 job per 800-1500 square feet for a factory, depending on type.

More jobs is good, but if we're going to look at this through the lens of industry returning, it's a lousy return, even before factoring in that we probably lost a lot more factories than we're gaining datacenters.

Re: Data centers have hiked electricity prices on the public by $23B

#46

Post by phil21 »

Hnrobert42 wrote: post #27
bpodgursky wrote: post #26

Every tech company building out datacenters would pay in a heartbeat to add commensurate power to the grid. The cost is not an objection. The problem is, there are insane and dumb regulatory barriers to adding power plants or interconnects. THESE ARE THE SAME PROBLEMS FACTORIES FACE WHEN RESHORING PRODUCTION, you should treat datacenters as the face of reindustrialization. Instead of complaining about using resources…

> Every tech company building out datacenters would pay in a heartbeat to add commensurate power to the grid. The cost is not an objection. Yeah. I'm going to need a source on this claim.

The fact datacenters are standing up extremely expensive on-site natural gas turbines due to the immense delays for interconnect.

Pretty much no facility operator wants to also pay for and operate their own power plant. They are small and expensive to operate compared to combined cycle natural gas or other sources, and lack of access to a wider grid means even more additional expenses like a additional on-site redundancy.

If they could simply pay for grid interconnect that is ready by the time facility construction is completed they would do so, in the vast majority of cases.

The money is in getting things online ASAP. Builders are effectively throwing unlimited buckets of money at all aspects of these builds at people who can get shit done fast. Power interconnect would be no exception.

I think folks have become numb to these huge numbers being thrown around in terms of how large this investment cycle/bubble is. Those numbers mean real things - like operators writing basically blank checks to jump the queue on networking equipment, wiring harnesses, etc. Those in the industry who are not these giant hyperscalers are kind of shut out of everything from cabling, network gear, HVAC, optics, etc. For any price - since our volumes are a joke compared to these huge contracts. There is a reason you see unprecedented margins for every company selling critical parts and equipment for these builds.

Heck, standard power cables have gone up about 8x in cost on us in the past 12mo. It’s been crazy to watch and hear from suppliers how they give insane quotes to these companies which get approved same-day.

It’s all a giant race, cost is currently not a primary concern if money can be used to speed anything up.

Re: Data centers have hiked electricity prices on the public by $23B

#47

Post by jbellis »

This just isn't true. On balance, data centers are turning out to be more like the "anchor tenant" of the power grid, financing improvements for everyone.

Overview article with links to actual studies: https://cityjournal.substack.com/p/data-centers-arent-raisin...

Re: Data centers have hiked electricity prices on the public by $23B

#48

Post by derektank »

gruez wrote: post #24

Isn't almost all of the datacenter build out for inference, rather than training? If so, what's the issue? If the electricity demand is coming from actual use, then why are people getting mad at datacenters or AI companies, rather than the actual people driving the demand? It's like getting mad at Amazon for how much they increased fuel prices, which they surely did, given all the fuel that their trucks/planes burn.…

The electricity supply is probably a lot less elastic than the gas and oil supply at this point. Also, there’s no global price of electricity like there (more or less) is for oil. Residents suffer a localized cost when a large electricity consumer moves in, and they benefit when they can force the consumer to move to another locality. Definitely NIMBYism, but the reaction is understandable.

It’s really just a question of saliency.

Re: Data centers have hiked electricity prices on the public by $23B

#49

Post by derektank »

bakies wrote: post #42
MaxHoppersGhost wrote: post #39

What is the increase in jobs/GDP for those communities that have paid more in electricity? A lot of these data centers are built in places with declining population and zero economic prospects for locals within their communities so they're a huge boon.

None? There's like 12 jobs per datacenter and the revenue goes to the Valley, mostly. The utilities get some profit but I doubt that money stays very local either.

Data centers pay taxes don’t they? That money presumably goes into funding government services which would necessarily raise the local GDP

Re: Data centers have hiked electricity prices on the public by $23B

#50

Post by phil21 »

kbenson wrote: post #45
bpodgursky wrote: post #26

Every tech company building out datacenters would pay in a heartbeat to add commensurate power to the grid. The cost is not an objection. The problem is, there are insane and dumb regulatory barriers to adding power plants or interconnects. THESE ARE THE SAME PROBLEMS FACTORIES FACE WHEN RESHORING PRODUCTION, you should treat datacenters as the face of reindustrialization. Instead of complaining about using resources…

Given that datacenters seem to much more manpower efficient, that seems like a poor trade, to the point it might not be worth viewing them similarly. I'm seeing info reporting about 1 job per 5000 square feet of a datacenter after completion, and 1 job per 800-1500 square feet for a factory, depending on type. More jobs is good, but if we're going to look at this through the lens of industry returning, it's a lousy r…

Sounds probably about right in scale. 5-10x more employees per sqft for common industrial or manufacturing businesses.

But local negative impact on community is not remotely comparable to most industrial development. Everything from traffic, noise, pollution, etc. A few bad projects aside, these things are glorified warehouses typically sited in suburban industrial parks or the middle of nowhere.

It all really just comes down to the electricity needs they demand. Otherwise it’s about as close to as free money to a community as you can get.

The most problematic thing to me with this whole deal are local tax abatements. Those should be outright illegal though for any development.

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