Lentis/Data Centers and Energy

Introduction

A data center is a facility used by organizations for remote storage, processing, and transmission of information. Modern data centers use physical infrastructure to create a cloud environment, forming the backbone for services like email, file sharing, big data, AI, machine learning, virtual desktops, and communication and collaboration tools.

Reasons of Growth

Data centers are rapidly growing. A 2023 McKinsey & Company report projects the industry to grow 10% annually through 2030, with $49 billion in new construction. This growth is driven by AI, tech sector expansion, increased cloud service bandwidth demand, global tech hub expansion, sustainable energy practices, and innovations in cooling and construction technology.

The Southeast and Pacific Northwest in the U.S. are seeing the largest expansion of hyperscale data centers, which are massive projects owned by the entities using them. Key factors in selecting new sites include access to submarine cable landings and energy-based tax incentives. Due to high energy and infrastructure costs, large companies are considering shutting down their own data centers, as in-house data management is difficult, time-consuming, and expensive.

Energy Usage

ChatGPT and other Large Language Models consume ten times more energy per query than a typical Google search. As the use of Artificial Intelligence, particularly generative AI, continues to grow, the energy consumption of data centers is projected to increase by over 160% by 2030.

Currently, data centers consume 2% of global power, with projections indicating this could double by 2026. This increase would be equivalent to the annual power consumption of the Netherlands. The future growth in energy demand by data centers remains uncertain, as major companies like Google, Microsoft, and OpenAI have not disclosed detailed energy usage data.

Microsoft, Google, and OpenAI have pledged to be carbon neutral by 2030, each in their own way. However, their current plans rely on clean energy sources such as wind and solar, which are not yet capable of keeping up with the rapid growth of data centers and their integration into communities. These energy-intensive data centers consume as much power as approximately 80,000 households.

Power Generation and Electricity

The current state of the United States' energy infrastructure, as reported in the Report Card for America’s Infrastructure, indicates that $197 billion in funding is required by 2030 for generation, transmission, and distribution. This funding is essential to meet renewable energy goals and the growing demand for electricity.

Another key aspect is the speed at which data centers are being developed. Data centers can be constructed in about 18 months, whereas bringing clean renewable energy production facilities online can take up to 6-7 years. This disparity has led states to prolong the service life of fossil fuel generation facilities, with coal plants operating beyond their intended service life. The drastic increase in energy demand has also prompted states to consider building new natural gas plants, which produce more CO2 emissions. Balancing carbon neutrality with the expansion of data centers is a delicate battle.

A more climate-friendly approach to this energy shortage is the resurgence of nuclear power. As a carbon-free electricity source, nuclear power is being explored by Microsoft, which plans to operate at Three Mile Island, and Amazon, which is considering the use of small modular reactors at existing nuclear facilities.

Producing the Energy

By 2040, the power demand from NOVA’s data centers is expected to match that of France, straining Virginia’s energy infrastructure and raising concerns about its negative impacts. Major stakeholders like Amazon, Google, Microsoft, Dominion Energy, and the State of Virginia are pursuing various strategies to meet the rising energy demand.

Energy Production

Data centers are energy-intensive, consuming more than 21,000 gigawatt-hours annually, over 8% of Virginia’s total electricity usage. To meet future demand, Dominion Energy plans to build new fossil fuel plants, such as a proposed 1,000 MW natural gas plant in Chesterfield County, and extend the lifespan of aging coal plants. These actions contradict Dominion’s goal of achieving net-zero emissions by 2045 under the Virginia Clean Economy Act (VCEA). This combined with Governor Youngkin backing the state out of the RGGI Act has sparked more controversy with environmental organizations and the State’s commitment to green energy.

To align with renewable energy goals, Amazon, Google, and Microsoft are exploring innovative approaches. Amazon, for instance, purchases renewable energy credits (RECs) and has launched the "Bring Your Own Power" (BYOP) initiative to supply its data centers with clean energy. However, environmental groups argue that RECs do not guarantee reduced fossil fuel dependency. Amazon also faces criticism for lobbying against legislation that would mandate renewable energy use for data centers. Dominion Energy is investing in clean energy projects, such as a 2.6 GW offshore wind farm, to meet demand sustainably. Nevertheless, critics argue that the utility could expedite the shift to renewables, as studies suggest Virginia's data center needs could be met with solar, wind, and battery storage.

Using Artificial Intelligence

Google has taken a unique approach with solving their energy usage problem with AI. Google conducted a two year long study using AI to optimize data center operations. Its DeepMind AI has reduced cooling energy use by 40%, significantly cutting overall energy consumption. These technologies exemplify how AI can mitigate the environmental impact of its infrastructure. Microsoft and Amazon are integrating AI to enhance energy efficiency and resource utilization, a critical step as AI-driven applications like ChatGPT and cloud services drive exponential energy growth. Although leveraging this technology offers long-term benefits, implementing changes and enabling AI to optimize data centers' energy use is not a quick fix.

Nuclear Energy

Nuclear energy is emerging as a potential solution to the energy crisis. Small modular reactors (SMRs) offer a cost-effective, scalable, and low-carbon option. Google has committed to having its first SMR operational by 2030, while the owner of Three Mile Island plans on reopening the facility. While SMRs produce a third of the power of traditional reactors, they are able to be constructed where a traditional nuclear plan can't and are much easier to maintain.Though nuclear energy could provide a reliable power source, concerns about safety, waste management, and public opposition remain.

Pushback

Water Scarcity:

While data centers are vital to the digital economy, they face significant criticism for their environmental and social impacts. A primary concern is water scarcity. Many data centers use substantial water for cooling systems, which becomes problematic in drought-prone regions. An NPR report highlights concerns in communities where residents argue that industrial water use worsens shortages affecting agriculture and households. For example, some facilities in the western United States consume millions of gallons annually, drawing ire from environmentalists and local governments.

Energy Consumption:

Another pressing issue is energy consumption and emissions. Data centers are massive electricity consumers, often relying on non-renewable energy sources. This contributes to significant carbon emissions, prompting backlash from environmental advocates. As these facilities expand, their growing energy demands also strain local power grids, leading to increased electricity costs or outages for nearby residents.

Inefficient Land Use:

Land use is another contentious topic. Hyperscale data centers occupy vast areas, displacing farmland, residential neighborhoods, and green spaces. These disruptions often spark resistance from communities that feel their local resources are being sacrificed for corporate interests. Additionally, noise pollution from cooling systems and backup generators disrupts nearby residents, particularly in suburban or rural areas.

Electronic Waste:

Finally, there is growing concern about electronic waste. The short lifespan of server equipment contributes to mounting e-waste, with inadequate recycling practices exacerbating the problem. Without stricter regulations, the environmental burden of data centers will continue to rise.

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Benefits

Despite the challenges, data centers offer substantial economic and technological benefits. They are the backbone of digital services like cloud computing, artificial intelligence, and big data, which drive innovation in industries such as healthcare, education, and finance. These advancements improve efficiency, enable breakthroughs, and create opportunities for growth.

Locally, data centers stimulate economies through tax revenue and job creation. A CBRE report highlights that states like Virginia benefit significantly from the property taxes paid by data center operators, which support public infrastructure, schools, and community projects. Construction and maintenance also create jobs for electricians, engineers, and laborers.

The industry is also making strides in sustainability. Many operators now invest in renewable energy sources such as wind and solar, reducing their reliance on fossil fuels. This shift decreases carbon footprints and sets a precedent for other industries to adopt green practices. Additionally, innovations in cooling technologies, such as liquid cooling and advanced airflow systems, mitigate environmental impacts.

Data centers also play a critical role in bridging the digital divide. By enhancing digital infrastructure, they improve internet access in underserved areas, enabling remote learning, telemedicine, and economic development. This connectivity ensures that more communities can participate in the digital economy, fostering inclusivity.

Conclusion

Data centers are integral to modern life, powering global connectivity and supporting critical technological advancements. However, the challenges they pose, ranging from water usage to carbon emissions demand thoughtful solutions. By prioritizing renewable energy, implementing innovative cooling methods, and actively engaging with affected communities, the industry can address these concerns while maintaining its essential role in society. With a balanced approach, data centers can continue to drive progress and innovation, ensuring that their growth remains sustainable and equitable.