What energy transition?

There is a good chance we are not going to meet the DOE’s renewable energy transition goal soon in light of rising demand for power capacity from data centers. The DICT is in charge of data centers but probably has no idea how many data centers are being built. And because they are government agencies, it will be surprising if DOE and DICT are coordinating.

DOE has prioritized a transition to variable renewable energy and it is almost certain we will have problems meeting normal demand growth much less meet the increased demand from data centers too. DOE’s anticipated power demand most likely underestimates the impact of demand from data centers.

Actually, even giant power utilities in the US failed to anticipate the huge amount of power demand from the data centers being constructed and put online. Some utilities had to delay the retirement of their coal plants while others had to put back on line mothballed coal plants to provide for the increased demand, Washington Post reports. Our DOE may have to rethink their ban on new coal power plants as well as make sure our aging coal plants are upgraded so these can operate indefinitely. Otherwise, we are at risk of massive power failures in as little as five years from now or earlier.

What are data centers and why are these necessary? Data centers are massive buildings that look like warehouses where thousands of computer servers are running continuously under climate-controlled temperatures. Data centers need a lot of continuous and stable supply of energy to operate. In today’s world, we use data centers every second, every minute, every hour, every day. Any outage or downtime can have significant financial consequences as well as serious disruptions to our daily lives.

When we take a selfie or a screenshot from our smartphones, data gets backed up to the “cloud.” What really happens is our phone data gets stored in data centers. Everything from financial transactions, to social media, to government operations require data centers.

In other words, data centers are a very essential part of the critical digital infrastructure in today’s world. This is especially true for us with the premier role the BPO industry has in our economy. Demand for data storage is constantly growing and with it, the need for more data centers with ever-increasing capacity, putting more and more strain on the ability of utilities to cover their power needs.

Google says a typical data center can have an electrical demand of 100-300 MW. PLDT is now building its 11th and biggest data center in Sta Rosa with a capacity that requires 100 MW. Globe Telecom’s joint venture with Singapore-based ST Telemedia Global Data Centers could beef up its data capacity from the current 30-100 MW.

There are data center projects from Converge, Megawide and others that will all probably need 1,000 MW in the next few years.

The dilemma of the tech industry as well as of the power utilities is how to meet all that vastly increased demand and still stay on course with the transition to green energy.

One solution is co-location of data centers with solar and wind power installations backed up with battery or other energy storage options. The idea is to avoid the need to draw energy from the grid especially at peak times.

Ed Saavedra and Louie Ferrer of Megawide told me that they are co-locating their data centers with renewable energy up to its fullest extent possible (i.e. solar rooftops and embedded solar power). Still, they said “it would be best for government agencies to come up with a holistic plan to map out properly the suitable locations for these data centers (taking into account the ICT and power infrastructure requirements); and the same can be included in the Transmission Development Plan of NGCP.”

Artificial intelligence is adding pressure. A background briefing paper from Goldman Sachs says that on average, a ChatGPT query needs nearly 10 times as much electricity to process as a Google search. A single ChatGPT query requires 2.9 watt-hours of electricity, compared with 0.3 watt-hours for a Google search, according to the International Energy Agency.

Goldman Sachs Research estimates that data center power demand will grow by 160 percent by 2030. This will drive the kind of electricity growth that hasn’t been seen in a generation.

Then there is the bitcoin mining industry, another big power consumer. A report from the Energy Information Administration found that bitcoin mining was responsible for two percent of the US’s total electricity demand in 2023.

Goldman Sachs pointed out that with improved usage efficiencies “over the last decade, US power demand growth has been roughly zero, even though the population and its economic activity have increased.”

But between 2022 and 2030, the demand for power will rise significantly. Goldman Sachs Research estimates US utilities will need to invest around $50 billion in new generation capacity just to support data centers alone. One wonders if our DOE has an idea how much investment in new generation capacity is needed to support our economic growth and data center needs.

Building new grid infrastructure is crucial to the energy transition. Integrating huge numbers of variable wind and solar farms into the energy mix has made upgrading grids ever more complex.

Breakthrough Energy, the innovation fund of Bill Gates, is launching a new open-source operating system to help countries build new electricity grids better able to take on new wind and solar power. Breakthrough Energy’s Grid Modeling Project will help build a 21st century clean grid by improving grid planning, forecasting and integration of clean energy.

The point simply is, our DOE and DICT have so much planning and coordination to do beyond looking after normal growth. No one knows if they are doing anything quietly. Hopefully they are on the ball.

Boo Chanco’s email address is [email protected]. Follow him on X @boochanco