The Ohio subsidiary of American Electric Power (AEP) wants to impose new tariffs on the growing number of power-hungry data centers in the Buckeye State.
AEP, one of America’s largest electricity providers, requested approval of its latest pricing plans in a May 13 filing (PDF) with the Ohio Public Utilities Commission. This document outlines the major problems caused by data centers for the state’s regional network. As for who should be put into these plans, the energy world is considering larger data centers that use 25 megawatts per month in a single location, and mobile data centers (e.g., cryptocurrency miners) that use 1 megawatt per month.
Much of the motivation here is that AEP Ohio sees an impending energy crisis looming. The power generator imposed a moratorium on new service orders from data centers in March 2023, in order to explore what kind of impact additional data center expansion might have in central Ohio, and is now essentially proposing that bit sheds pay up front for power they may not even use. .
“The demand for computing power from data centers, which require massive amounts of electricity, is fueled by artificial intelligence and other new technologies,” Mark Ritter, president of Ohio State AEP, said in a prepared statement. “We need careful plans and strong commitments from large data center customers so that the right facilities are built at the right time.”
Part of the problem is that AEP Ohio’s customer waiting list for data centers and crypto now numbers 50 companies, and collectively they demand more than 30,000 megawatts of power in the future, we’re told.
“Building the electrical infrastructure needed to serve this type of load is not an immediate solution and can take years of planning, regulatory approvals, material acquisition and construction,” AEP Ohio says.
Overall, the energy used by data centers is expected to continue to rise, at least through 2030. The service agreements that AEP Ohio signed with data centers will double the load in central Ohio, and in this regard, the energy company’s five largest customers rotate About data center operations.
Finding the money to expand the grid will be critical to providing the 30 gigawatts needed for data centers and ensuring the grid is sufficiently redundant, though AEP Ohio says the money is not available. PJM Interconnection’s current forecasts for wholesale electricity business don’t take into account all of this additional demand, making current spending “a small fraction of the required investment.”
Tariffs and minimum payments required to keep data centers in check
AEP Ohio says data centers need to pay more to the regional power grid, and says it can accomplish that by imposing new tariffs that set new rates and force data centers to pay at least 90 percent of their contracted energy consumption regardless of their actual consumption. consumption.
Paying at least 90 percent of contracted power consumption would encourage data centers to order only what they actually need. Additional costs may also discourage data center operators from building and operating facilities at their current rate in the state.
As for customers trying to get out of their contracts or go bankrupt, AEP Ohio also proposes forcing data centers to post warranties if that happens.
We hope that all this additional money will be spent on expanding and strengthening the electricity network in the future. This would be financed by customers driving up consumption, rather than relying on generally higher rates that would disproportionately affect residents and other businesses.
AEP Ohio’s fear of data centers is certainly not unique. Arm CEO Rene Haas warned last month that data centers could account for up to a quarter of US energy consumption by 2030. However, it’s not clear how things will actually change, as some estimates aren’t quite as extreme; However, additional capacity will undoubtedly be necessary to fuel further data center expansion in the coming years. ®
