Data center development has become a hot topic this summer. According to Hannah Wiseman, professor of law at Penn State Dickinson Law, homeowners may be in for a shock when they pay their power bills at the end of this month, and not just because of an uptick in air conditioning to stay cool during a record-breaking heatwave.
Wiseman recently authored a blog examining the impact that data centers are having on residential electricity prices across Pennsylvania. Electricity prices have been steadily rising over the last decade and show no signs of slowing down in the face of massive, football field-wide data centers or suffocating temperatures caused by a global El Niño, she found.
In the following Q&A, Wiseman discusses why these facilities use so much power, whether they fare worse in the summertime and what impacted communities or individuals can do to voice their concerns.
Q: What is a data center? Why do they use so much water and electricity?
Wiseman: A data center is basically a big warehouse full of racks of servers that use computer hardware to power cloud computing, multiplayer video games, online purchases and other digital activities. Additionally, they train artificial intelligence (AI) models, and use those models to answer our queries. When someone types in a query in most search engines, there's now typically an automatic AI result that pops up every time we search for an answer to a question. When we do that, though, we use a massive amount of electricity and water to both power and cool the center facilitating the search.
A growing number of them are called hyperscale data centers, often meaning they use 100 megawatts of electricity or more, although definitions can vary. One of these can use the same amount of electricity daily that a small or medium-sized city, around 80,000 houses, would use daily. More of these centers are being built each year, and this increase in electricity use means growing demand and, in turn, higher electricity prices.
Q: How do data centers affect the power bills of the communities surrounding them?
Wiseman: Our electricity comes from a broader maze of wires and generators that send electricity to us. You can think of the power grid on several scales: at a smaller scale, an electric utility company controls the wires delivering electricity between individual homes in several towns and cities, although many utilities serve a larger region within a state.
This smaller grid is usually served by one utility - if a data center is built in that utility's territory, the utility must raise its expenditures to fulfill the power needs. Adding consumers is often good because you spread out the costs of all the wires among more people, causing individual costs to go down. However, a data center uses so much electricity that the initial shock of having to upgrade the infrastructure to fill the demand is spread among all the consumers, causing prices to initially rise across the board.
On the other side, utilities must purchase electricity wholesale from a really big grid in the Pennsylvania Mid-Atlantic region, and those wholesale electricity prices are going up, as well, because of the increasing demand. So, utilities are having to pay more for the wholesale electricity they get, while also having to upgrade the smaller wires that serve their customers in their region. This combination is why we're seeing both wholesale and consumer prices going up.
