A report released Tuesday by Western Resource Advocates warns of the need to be prepared for the amount of energy and water that data centers demand, especially in the dry interior West.
“The expansion of AI and other technologies has created a rush to build data centers so that we now need to rapidly expand our energy grid on a massive scale. We are on the cusp of monumental change, and we can’t afford to get this wrong,” said Deborah Kapiloff, policy adviser at the advocacy group.
“Without proactive regulation, there is a significant risk residential customers will be on the hook for higher energy bills, and the progress we’ve made towards reducing pollution from burning fossil fuels could be lost.”
The report notes the extreme amount of energy data centers need for computing as well as cooling to protect the computer hardware they house.
If the projections of data center load growth from the region’s major utilities become reality, these new facilities in Arizona, Colorado, Nevada, New Mexico and Utah could have annual water use of 21,600 acre-feet (7 billion gallons) by 2035, according to the data. This amount of water serves the annual needs of up to 194,000 people.
In the organization’s new report, Data Center Impacts in the West: Policy Solutions for Water and Energy Use, energy and water experts from Western Resource Advocates present a summary of the electricity load forecast for data centers in the region along with the potential water impacts.
They assert that robust regulatory policies can protect customers, ensure water resources are conserved and spur investment in clean, innovative technologies. This report’s key recommendations are focused on three main categories: advancing clean energy, preserving scarce water resources, and protecting electricity customers.
Some of the organization’s policy solutions include water efficiency and data reporting and load shifting, that is using energy at times when there is not peak demand, if possible. Additionally, economic development incentives should only be in play if it is demonstrated that the energy demand will not adversely impact existing customers.
Stress on the grid
The organization warns of hiked power bills because of the demand on the grid that is already straining to keep up.
“The collective annual energy demands of the utilities in WRA’s region are projected to be 32% higher in 2030, and 55% higher in 2035. Over the 2025-2035 timeframe, that equates to an annual growth rate of 4.5%. This forecast is significantly higher than what utilities were projecting just a few years ago and this unprecedented growth is straining the reliability and affordability of our energy system,” the report’s executive summary states.
A Utah solution?
But this last legislative session, Sen. Scott Sandall, R-Tremonton, proposed a measure to insulate current ratepayers against an explosive growth in load demand and allow developers of these centers to operate in a competitive space to find their own energy.
“What we have now is an exponential increase in demand where companies are coming in and wanting to place data centers. They’re wanting to do AI and these large loads are, quite honestly, very hard to service under our normal, current regulated monopoly system that we have in our state. What we’ve done with this bill is we have allowed for loads that are over 50 megawatts to come in and operate in a competitive space, rather than a regulated monopoly space that we typically allow,” Sandall said.
He made several key points in legislative testimony.
“This would only (apply) in the geographic area of Rocky Mountain Power and allow Rocky Mountain Power to compete in individual contracts,” Sandall said. “It also gives a pathway for outside entities to come in and be service providers for these large loads,” Sandall said. “As I mentioned with the substitute, one of the biggest sticking points has been we’ve tried to create this wall between the new loads and the existing customer base to make sure that costs don’t get allocated back to regular or normal or existing customers for ramping up in these new large loads.”
Sandall’s bill, SB132, was signed into law in late March by Utah Gov. Spencer Cox.
“Decision makers must respond to the immediate challenge of meeting data centers’ burgeoning energy and water demands, while also building policies that ensure data centers accelerate progress toward energy, water, and climate goals over the long term,” said Kapiloff. “With smart policy solutions, there are opportunities to power data centers with renewable resources and sustainable water use practices. Now is the time to get it right.”