The severe winter storm that hit 34 states left hundreds of thousands of people without power. The continued bitter cold following Winter Storm Fern is still testing power grids, already strained by the rush of new AI data centres.
Over the weekend, wholesale electricity prices rose in Virginia, the state with the most data centers. And while this isn’t surprising given the surge in energy demand for heating, it could add to the growing discontent over rising utility bills that has fueled protests against data centers across the US. Utilities and grid operators were already working hard to meet AI’s growing power needs, which could make it even more difficult to prepare before a weather disaster hits.
“It’s definitely going to lead to more pricing volatility,” says Nikhil Kumar, program director at energy consulting firm GridLab.
“It’s definitely going to lead to more pricing volatility”
Kumar was quick to say it was still too early to say what impact data centers have had on the power grid during this week’s cold snap, and the impact could vary from location to location. But this week’s stress test will be important to watch amid the challenges the power grid faces as the US faces a changing energy landscape and a changing climate.
Wholesale electricity prices in Virginia climbed above $1,800 on Sunday, up from about $200 a day earlier, CNBC reported. Utility Dominion Energy, the largest energy provider, did not immediately respond to questions. The Verge About the factors influencing rising wholesale costs, and how much it will affect residential customers’ bills. The company announced Monday that it had restored power to 85 percent of the 48,000 customers affected by the storm in Virginia.
Keep in mind that many different issues drive up energy costs. Demand for electricity is growing faster than in more than a decade due to AI data centers as well as domestic manufacturing and the electrification of homes and buildings. Utilities are having to spend a lot of money upgrading aging infrastructure as well as repairing damage caused by intense climate-related disasters like hurricanes, which have contributed to longer power outages in the US.
With the electricity grid about to turn a century old and an increasing need to extend transmission lines to connect new power sources and customers, “we’re dealing with our Grandfather Buick,” says George Gross, professor emeritus of electrical and computer engineering at the University of Illinois’ Granger College of Engineering.
When a local utility experiences an emergency, it can usually obtain additional resources from others. Officials were more concerned about this winter storm that such assistance would be limited, given how large an area it affected. “A lot of them are stuck in exactly the same predicament that you’re in—not getting the help you need from your neighbors,” Gross says.
Extreme weather causes prices to rise due to increases in heating or cooling demand and congestion on power lines. Supply shortages could also make energy more expensive and increase the risk of outages if the cold halts production of natural gas, the primary energy source for power and heating in the US. Ice accumulation on power lines and tree branches – the biggest threat to power grids this week – could cause power outages.
We saw all of these factors come into play during Winter Storm Fern. They caused more devastation in Texas in 2021 when Winter Storm Uri resulted in millions of residents losing power and at least 246 lives.
Fortunately, this week’s cold snap hasn’t been as devastating, thanks in part to the preparedness of utilities and power grid operators. Texas in particular has deployed more batteries for energy storage in 2021, which helped this week.
The Energy Department also issued orders over the past several days to grid operators overseeing much of Texas and the East Coast, authorizing them to deploy backup generators at data centers and other major industrial facilities “regardless of environmental permits or limits established by state law.”
And yet we don’t know how much those measures could help ease the supply crisis because it’s not clear how it would work logistically and what authority the federal government has in these matters, experts explain. The Verge. The order has not yet applied to generators in Texas because the state has not reached a high enough energy alert level, according to Joshua Rhodes, a research scientist at the University of Texas at Austin.
“If this is a tool we’re going to use, we need to figure it out well in advance of the winter storm,” he says. “Making policy during emergency situations usually does not yield the best policy.”
Higher electricity prices may eventually encourage AI data center operators to voluntarily curb their electricity consumption during times of surge in demand. They can even make money doing this through what is called a demand response program. Similarly energy-hungry data centers used as crypto mines have made millions doing so in recent years. But Rhodes doesn’t expect AI-obsessed tech companies to do so any time soon.
“Right now, there’s a lot of hype,” Rhodes says. “They almost don’t care what the price of electricity is, it’s the minimum when it comes to generating AI value.”
At the time of writing on Tuesday, more than 489,000 customers across the US were still without power. And until the cold subsides, there is no danger of ice accumulation on critical infrastructure.
<a href