Data centers contribute to high prices as energy bills electrify local politics

Data centers contribute to high prices as energy bills electrify local politics(wsj.com)

105 points by moose_man 198 days ago | 67 comments

twoodfin 197 days ago |

I am not an expert in electricity generation or transmission, but it does seem strange that this “data center scare” is happening coincidental with (other?) big jumps in home electricity rates that have nothing to do with data centers.

For example, Massachusetts rates are way up because New England politicians have spent more than a decade fighting natural gas infrastructure, especially pipelines that would bring cheap North American gas vs. LNG that is in short supply post-Russia/Ukraine war.

At the same time, MA politicians created the “Mass Save” program that’s effectively a giant boondoggle where utility ratepayers are subsidizing fly-by-night “energy efficiency” contractors who have no incentive to be efficient at all.

trashface 196 days ago | |

There is a big push in PA too. Our governor Josh Shapiro seems more pro-datacenter than not. (Note he is a potential 2028 presidential hopeful who, full disclosure, I voted for and don't regret doing that since the alternative was a total nut job IMHO).

Meanwhile everybody's electric rates are spiking, some dramatically so. There isn't much new power generation being built here. Amazon is taking over an old US steel plan that had a dedicated gas generator, and MS supposedly has invested in restarting TMI's non-melted down reactor - i'll be amazed it that ever produces a drop of power though I'm sure billions will be spent on it.

potato3732842 197 days ago | |

>At the same time, MA politicians created the “Mass Save” program that’s effectively a giant boondoggle where utility ratepayers are subsidizing fly-by-night “energy efficiency” contractors who have no incentive to be efficient at all.

Who were they trying to pander to by doing that? Who's votes did the politicians expect to reap?

I feel like the goddamn goose in the meme.

They did that stuff because well off white collar jerks with no problems thought it sounded good. And now, as usual, the rest of society has to pay for it.

nine_zeros 197 days ago | |

> For example, Massachusetts rates are way up because New England politicians have spent more than a decade fighting natural gas infrastructure, especially pipelines that would bring cheap North American gas vs. LNG that is in short supply post-Russia/Ukraine war.

This problem is unrelated to datacenters. The datacenter boom has created demand in markets outside New England, which is seeping into New England. It only got compounded by lack of natural gas.

> At the same time, MA politicians created the “Mass Save” program that’s effectively a giant boondoggle where utility ratepayers are subsidizing fly-by-night “energy efficiency” contractors who have no incentive to be efficient at all.

Mass save is actually a great program. Mass houses are old, creaky, and lacking insulation. Mass save let these things be upgraded at a lower price burden to the masses. If you are talking about heat pumps, heat pumps can have backup furnaces - you could use natural gas if you wanted. The idea behind a heat pump was to have it work with solar, wind, and other low cost energy sources.

Then trump came in and shot all these other sources at gunpoint. And you are seeing it in your bills.

helsinkiandrew 197 days ago |

Energy prices have risen roughly at the rate of CPI since 2022, perhaps we got used to the relatively flat prices for the previous decade:

https://www.apolloacademy.com/electricity-prices-have-grown-...

bigbadfeline 197 days ago | |

> Energy prices have risen roughly at the rate of CPI since 2022, perhaps we got used to the relatively flat prices for the previous decade:

That statement seems to be upside-down. Energy factors into the cost of almost every other product, that is, the rise of energy prices causes much of the inflation elsewhere, which is then reflected by the CPI.

Also notice, 2022 is when the data-center and AI boom started, that too fits the premise of their culpability.

But then we live in a bizarre world where inflation is good, and the price of everything rising together is just wholesome and natural.

ssl-3 197 days ago | |

Indeed. You're quite right.

And while it's certainly an unpopular concept to present, electricity right now is a whole lot cheaper (on average, in the US) when viewed through an inflation-tinted lens than it has been at many times in the past.

I find that FRED (from the Federal Reserve Bank of St. Louis) is pretty useful for visualizing that kind of data, in part because it shows folks exactly what went into producing the chart. The citations and any maths are all included for inspection (see the "Edit Graph" link). It's hard to use FRED to present information disingenuously: It simply is what it is.

For instance, here's a chart with one line showing inflation-adjusted electricity expense, in the US, over time: https://fred.stlouisfed.org/graph/?g=1NyKY

And here's one that also adds several lines with raw data: https://fred.stlouisfed.org/graph/?g=1NyNc

(wherein: It can be plainly seen that the 1980s were very dark times indeed, and the first ~half of the 1990s weren't so great either. We're currently somewhere around turn-of-the-millennia in terms of how much our electric bill hurts compared to how much everything else hurts.

(And none of this should be construed to mean that I'm ecstatic about paying my power bill or something. Everything is fuckin' expensive these days -- including electricity.))

jasonsb 198 days ago |

This is not true. Energy prices are rising globally, even in countries with few or no data centers and declining industrial activity. It increasingly looks like a coordinated effort to extract as much revenue as possible from consumers before widespread adoption of solar power shifts the balance.

l1n 198 days ago |

hm, I think this contradicts the results from https://www.sciencedirect.com/science/article/pii/S104061902...

cpitman 198 days ago | |

Yeah, I was thinking of the same study. Looking at just the conversation on HN, lots of people are installing solar. Solar reduces the amount of energy used by that customer, but does not lower the cost of infrastructure to distribute power to that customer at all. And the cost of electricity is dominated by distribution and transmission, not generation. With an increased share of costs going to overhead infrastructure, the cost per watt goes up. Higher consumption increases the share of costs due to generation, and cost per watt goes down.

"Contrary to these concerns, our analysis finds that state-level load growth in recent years (through 2024) has tended to reduce average retail electricity prices. Fig. 5 depicts this relationship for 2019–2024: states with the highest load growth experienced reductions in real prices, whereas states with contracting loads generally saw prices rise."

thechao 198 days ago | | |

Which is why cheap batteries will be the camel that broke the straw's back. It's really hard to find numbers, but I like 20–30$/kwh by 2030. At those prices I can get a 4 day backup for an oversized (50kw) solar panel install for my house for 20k$. Why even hook up to the grid, at all?

chrisBob 198 days ago |

My solar install is scheduled for December. Even if it ends up missing the cutoff for a tax break I still think it’s the right thing to do. The combination of investing in green energy and locking in my effective electric rate is the smart move right now.

… and I heard on Friday that OpenAI is planning a data center 15 miles south of me. That can only make things worse.

nonethewiser 198 days ago | |

Whats the time to make your money back with and without the tax break?

SteveGerencser 198 days ago | | |

We cancelled our install after TN removed the state level breaks. It pushed the payback out past the expected lifespan of the panels (25 years). I would have been fine with a 10 year payback, but 25+ was just not worth doing.

dmoy 198 days ago | | |

I think GP's point isn't necessary "with vs without tax break", it's "with vs without giant future increase in electricity price"

casey2 197 days ago | | |

You'd probably be cutting it close with the life of the panel (though maybe electricity price increase will save you) For CO2 I think it pays itself off fairly quick. It's probably the best investment you could make from a CO2 and local air quality perspective, maybe if your insulation is very bad or switching to a bike from a large personal car

edm0nd 198 days ago | | |

you'll basically never make it back iirc

by the time you may even get close to paying it off, its time for a new one.

really only worth if you just want to have solar and got a spare 5-6 figures to drop on it and wont miss that money.

hopefully this changes in the near future and it will be way more affordable.

0xbadcafebee 198 days ago |

I also am in the process of completing a solar install to get the tax breaks expiring this year. Depending on total cost (i'm DIYing and didn't predict all expenses) I can pay it off in 5-7 years. My power bill is up 50% in one year, and has been increasing for years. With more datacenters taking up more power (which we pay for), the bill's only gonna increase.

There is still time to complete a solar install yourself and get federal+state tax breaks. Call up your energy provider, get connected to their distributed generation department, and submit the forms/documentation/plans they require. Then you build your system, get it inspected, the utility approves it and completes the hookup. ChatGPT makes all this fairly easy. I can upload my forms and the process to GitHub if anyone wants to see the process for NY state.

The simplest grid-tied system is solar panels + roof-mounting equipment + microinverters + a combiner box + a disconnect switch. This is enough to send solar power direct to the grid, assuming your microinverter supports the standards your power utility requires. You can do a PV+ESS (battery) system, but it's a ton more expensive (even assuming you DIY). It should be cheaper to do grid-tied projects, but many power utilities now mandate new standards for grid-tied devices that only the expensive inverters support.

If you do off-grid (which I believe there's still some tax breaks for, depending), you can build a PV+ESS system much cheaper, as the off-grid equipment doesn't require the more expensive standards. We're talking $3.5k vs $9k for the same system.

It would also be cheaper if we supported balcony solar the way Germany does. A big concern of mine is that poor people and people in apartments (~40% of Americans live in apartments) won't have the ability to supplement their bills with solar. If all the people with money and land/houses switch to solar, and the poor can't, the poor'll be propping up a big portion of the energy sector themselves, which is unsustainable.

Ericson2314 197 days ago |

It is good the electricity demand is going up, because this will help us electrify things.