US Grid Constraints: Towards 40GW+ of Behind-the-Meter Datacenter by 2028?(newsletter.semianalysis.com) |
US Grid Constraints: Towards 40GW+ of Behind-the-Meter Datacenter by 2028?(newsletter.semianalysis.com) |
Worse, the burden [generating energy] increasingly falls on the buyer [data center developers]
It's as if trucking companies flooded the highways with so many trucks that people couldn't commute to work anymore.
For example:
PS5 Combined Cycle Power Plant for Aluminium Bahrain (ALBA)
https://www.idom.com/en/project/ps5-combined-cycle-power-pla...
India
https://nalcoindia.com/business/operation/captive-power-plan...
Tiwai Point Aluminium Smelter, New Zealand
This seems to further confirm that, though now the data centers are being portrayed as the victims in this.
The sentence immediately following your quote:
> securing grid-connected power now often requires developers to post substantial letters of credit, security deposits, or sign take-or-pay commitments to fund the generation built to serve their load.
The question is, if they couldn't commit to paying the utility, how can they finance building their own independant grid equivalent? Did they find some other sucker to take on the risk?
That makes sense up until you realize that the data centers aren't just burning watts for fun. They're providing a service that is in extremely high demand to a very high amount of those other electricity customers.
> It's as if trucking companies flooded the highways with so many trucks that people couldn't commute to work anymore.
And those trucks are delivering products to the stores those commuters shop at.
But holy shit is something broken if that sort of approach is more economically effective (middle of nowhere Alaska not withstanding) than having the people who not only specialize in pipes for jiggling electrons, but have all sorts of preferable treatment from regulators and expertise in financing these sorts of things, just enlarge the size of the pipe to your door.
Furthermore, the grid wants to be as big as it can for basically all the same inflow/outflow smoothy reasons a bank or an insurer wants to be. Something is very, very broken here if big, highly financed corporate interests are saying "no I'm not gonna get all my power from the grid" and the grid is saying "actually this is fine". They should be jumping at the chance to essentially have someone else at least partly subsidize their improvements.
Everyone wants to whine about future volatility, will the data centers be around to pay for what they ordered, etc, etc. But the energy industry has a long, long, long track record of financing this risk away. Oil and related energy infra has been boom and busting for over a century.
30yr ago it would have been unfathomable that anyone without an extremely niche case would go where the energy is rather than just ordering up power from the grid.
Every DC I've visited - probably ten - has on-site generators, for redundancy. To a certain type of mind, that's capital going to waste. I can imagine a bean-counter desire to sweat that plant.
I agree that today's economics is very broken, but co-siting generation and consumption is probably not a symptom.
Aside: Language is whatever people use, but, "per se" is Latin for "in itself". "Per-say" is an eggcorn.
https://www.oxfordeconomics.com/resource/the-rising-challeng...
Many kinds of renewables are day/night, weather dependent, you don't get this level of reliability without a fossil fuel backup. If you already need to build a dedicated gas power plant to power your data center, then the decision to invest in an additional renewables power plant depends on the costs of the natural gas. (Additional capital expenses of the renewables power plant vs reduction in consumption of the natural gas).
Putin only has a certain amount of the resource on tap and sells it to someone eventually. Meanwhile data centers will eat up whatever you throw at them at any price, especially that in principle they don't need to be connected to the grid, so I imagine setting up their power supply must take months at the longest.
So, we're talking 40GW. Lets see what China does:
https://energyandcleanair.org/china-energy-and-emissions-tre...
"In the first two months of 2026, China added:
32.5 gigawatts (GW) of solar power capacity, down 18% from last year. 11 GW of wind power capacity, up 19% from last year. 20 GW of thermal power capacity, up 414% from last year. 1.2 GW of hydro power capacity, down 36% from last year. 1.2 GW of nuclear power capacity. "
Edit: to the proponents of nuclear - i think nuclear is very damaging to society as it promotes corrupt crony-government capitalism instead of market forces.
2.2-2.5 GWdc solar capacity which at 600W/panel amounts to 14-17sq mi plus additional 8-12GWh of storage to deal with nighttime, two-three days of cloud cover is not going to work with these numbers.
Ballpark 5-7BN$
Nuclear otoh, 1GW continuous - gives constant power, badly managed first of a kind (or first one after decades) build will be at around 10-15BN and that’ll cover two 500MW data centres.
There’s also the second/third degree order effects nuclear power stations have of creating jobs and industrial manufacturing demand. To run a nuclear power station you need to employ 1000 people (engineers plus support staff) - that’s a small town’s worth of adults. So you’ll need a town with a school, hospitals, stores - those need staffing as well.
Unfortunately building nuclear is not something that’s currently a feasible path as it requires patient capital and long term vision and planning.
So gas turbines it is at around ~1BN$
In Europe, we approach energy generation as a political, or climate problem. We are building solar and wind power sources, not to make energy cheaper, or to make grid more resilient, but to fulfill an ideological goal.
The results are, not great, to be honest. The energy prices have increased substantially, and are now driving our chemical industry bankrupt.
Edit: I do not dispute the climate change. I am only highlighting impacts of current policy.
Without enforcement it will happen continuously with snail pace
There is money now for a huge investment boom, which is what is happening in the US and China. With EU failing completely.
Not in western Europe, because they spent almost all their excess economic output over the past few decades on welfare/transfer payments.
But fuck them, they are poor people so we don't care about them /s .
Additionally, people against data centers are accused of being paid by China [2]
[1] https://www.theguardian.com/environment/2026/feb/13/elon-mus... [2] https://fortune.com/2026/06/10/kevin-oleary-trump-administra...
IDK about Britain, especially historically when you would have been building aluminum smelters. It's not normal in the US more or less since the advent of the grid. I'm sure people will be along shortly to construe exceptions or special cases where the fossil fuels were extra cheap as the norm or heat was what they also needed and it was cheaper to capture that locally and make some electricity too.
>Every DC I've visited - probably ten - has on-site generators, for redundancy. To a certain type of mind, that's capital going to waste. I can imagine a bean-counter desire to sweat that plant.
But they don't use those for any semblance of "normal" load. Those are strictly for redundancy not "ah it's 3pm, power's getting expensive better fire up the genset for 4hr". At least that's normally how it is. It's not normal for it to be possible to out compete the utility even after fixed costs are amortized in. Bigger generation is more efficient, if you're buying fossil fuels then buying them in bulk is more efficient. Etc. etc. It should be cheaper to have the people who benefit from all that string you a wire.
HN arguing in favour of a planned economy - see, we aren't free-market cultists!
When the price is right all kinds of contracts and agreements are usually thrown out the window - especially if the penalties are small enough to make it worth it.
Eg, the disastrous energy policies all across Europe which have made price of energy insanely high with no hope of ever coming down (these high prices are all locked in with long term contracts).
America just builds lots of new power. Because of fewer market distorting policies the new power comes online at cheaper marginal rates so the price doesn't go up. And now Texas has some of the greener and cheapest energy in the West.
And grid battery works and is cheap enough now.
But I haven't looked into where these datacenter are being placed, I'm assuming that although solar is cheap now, the surface needed would make the purchase of nearby land probably not worth it. These new categories of datacenters are becoming very energy dense...
- battery storage
- and in the article
"However, AI labs and some hyperscalers have relaxed those requirements as there is now a lower uptime tolerance applied to both inference and training, not just training. Many of Meta’s self-built AI datacenters, for example, target just two nines of uptime and forgo backup generators entirely, as detailed in our Industrials Model."
Europe's generation is roughly flat during the same period.
It doesn't make sense to build a lot of everything in a system without growth in generation. Replacing decommisioned generators would be enough. Growth in solar and wind generation (for ideological or economic reasons) means there's less reason to build new capacity of other types. There's complications there with firm vs intermittent capacity, but that's a different discussion.
US electrical generation was also flat from 2000 to 2020, but seems to be growing again since then, but not anywhere near China's growth rate.
But coal was 4.1 million GWh in 2014 and 5.0 million GWh in 2021; that's a lot of (relatively) new coal. Fossil fuel growth since 2023 is a lot less than earlier years, so maybe they have hit saturation for fossil fuel generation. I would expect high fossil fuel prices so far this year would drive usage lower, the stats for 2026 should be interesting.
[1] https://en.wikipedia.org/wiki/Electricity_sector_in_China
yes, they don't seem to fall for the "solar is unstable" trap and recognize new reality - the solar + wind smoothed by nuclear/gas is the new baseline
To the comment on the coal below : not really. You don't need that much as a smoothing capacity.