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AI's transmission game change

May 15, 2024
Bolts surging toward data center

Illustration: Brendan Lynch/Axios

The coming power suck from AI is going to upend the way D.C. talks about transmission policy.

Why it matters: The grid is already getting an influx of new demand, but future power lines are stuck in a political logjam on the Hill.

  • The specter of artificial intelligence — and new chip and "clean" tech manufacturing — just might unlock that debate.

Zoom in: Debate about transmission has taken on a climate frame because the need to get IRA-fueled renewables on the grid is a primary reason to build new lines.

  • "Looking a few years down the road, the politics of this are very likely to shift," said Rob Gramlich, president of Grid Strategies. "Very few people recognized the extent of power demand growth before this past winter."
  • Big tech companies also often want to tie their operations to low-carbon power, which creates fresh opportunities to bring renewables to market.

The big picture: Our assumptions about power demand and generation are changing quickly.

  • After decades of flat electricity demand, grid planners are looking at a 38 gigawatt growth in peak demand through 2028, per one estimate from Grid Strategies. (One gigawatt is enough to power about 750,000 homes.)
  • Data centers, which currently account for roughly 2% of U.S. electricity demand, could double their power suck by 2030, not to mention new load from hydrogen production, manufacturing and EVs.
  • FERC's new regional transmission rule could help get power lines built to deal with that — but experts say it won't fully solve the problem.

Power-hungry companies and transmission advocates are trying to make this case, but they haven't penetrated the Hill messaging.

  • The partisan reaction to the FERC rule "could be a bit of a wake-up call," said Bryn Baker of the Clean Energy Buyers Association.
  • Investments in new manufacturing and AI data centers are "directly tied to our ability to access affordable, reliable and clean energy to power those operations," she said.

Yes, but: There are dark sides to AI's rise that could trickle into energy politics.

  • These data centers could spark plans for new gas generation and even keep coal-fired plants online.
  • That might just entrench the fossil fuel vs. renewables divide.

The bottom line: AI is only an emergent piece of a much larger power demand puzzle with EVs, building electrification and domestic manufacturing.

  • "This is not a question of how much you believe in climate change," Sen. John Hickenlooper told Axios. "This is demand for electricity that we're going to need."
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