Data centers contributing to rising electric bills
TOLEDO, Ohio (WTVG) — Households across Ohio saw their electricity costs climb last month, and they could be facing another hike next summer as surging demand continues to strain the power grid.
Data centers are largely to blame, according to the entity that manages the electric grid for Ohio.
The facilities house computers and servers that power artificial intelligence, cloud computing and digital storage. Tech companies are increasingly expanding their number of data centers across the country amid the global race to control artificial intelligence.
Some are planned or are already being constructed across Ohio, including one recently announced by Meta in Wood County.
Jon Gordon, director of the trade association Advanced Energy United, said new power generation needs to come online to support the rapid rise of data centers.
The average age of critical infrastructure for the nation’s electric supply is 50-60 years old, Gordon said. Older generating facilities are being retired, he said, while new clean energy projects trying to come online are stuck in stuck in a queue waiting to be connected to the grid. It’s a process that is taking an average of 6.5 years.
“These data centers couldn’t come at a worse time,” Gordon said. “These data centers can be built much more quickly than the infrastructure needed to support it, so you have an inherent mismatch there.
Ohio is one of 13 states included in the PJM Interconnection, the organization that manages the region’s electric grid.
PJM works annually to project the next year’s supply and demand. It sets prices based on an auction from power suppliers.
Last year, it announced that its annual power market auction resulted in an 800% price increase for its region. A lawsuit filed by Pennsylvania Gov. Josh Shapiro led to a settlement that resulted in PJM placing a price cap and a floor on the next two auctions.
The results of last year’s auction ultimately led to electricity bill increases of around 20% in PJM regions, including in Ohio.
The results of this year’s auction will be announced next week. If prices increase again, experts believe data centers will still be largely to blame.
Some tech companies have vowed to help foot the bill for the costs associated with generating power for their data centers. But critics worry ratepayers still may be forced to subsidize the costs associated with powering data centers.
“This is a whole new class of customer,” Gordon said. “It’s completely different than anything we’ve seen before in this industry. All of those are being sorted out in real-time as these data centers are being proposed.”
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