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US energy utilities are receiving massive requests for power from data centre companies, in some cases exceeding their peak demand or their existing generation capacity, Reuters reported.
The requests, which come as large tech companies seek to build out data centre capacity for power-hungry AI systems, create a complicated picture for utilities as they try to project real demand and how to meet it.
The news agency said nearly half of 13 major US utility earnings transcripts it surveyed indicated that they had received inquiries from data centre companies for more than their peak demand or more than their existing generation capacity, including everything they supply to homes and businesses.
Power requirements
In response, utilities have announced billions in additional capital expenditures, with some doubling their five-year investment plans.
Utilities must weigh the risk of underestimating demand, and increasing the risk of outages, with the risk of overbuilding and leaving consumer rate-payers to pay for the costs.
Tech companies are approaching multiple power utility providers within the same state, or across several states seeking bids for the same project, inflating power demand projections, the report said.
Jon Gordon, a director at clean energy trade group Advanced Energy United, whose members include large energy users such as data centres, said utilities were seeing a “huge proposed influx” of “abstract projects”.
An energy management systems provider said that data centres typically seek bids from three companies in many markets, with one winning the bid and the other two dropping out.
Dallas-area utility Oncor Electric, a subsidiary of Texas-based Sempra, said it received a request to connect an additional 119 gigawatts, or nearly four times the peak power use on its system.
Allentown, Pennsylvania-based PPL said it had more than 50 GW of data centre requests, including at least 9 GW in advanced stages of development, compared to its current generation capacity of 7.2 GW.
Both companies said they only go forward with spending plans once they have concrete customer agreements in place.
Demand questions
Utility Evergy, serving Kansas and Missouri, said its pipeline of additional demand driven by data centres nearly doubled to more than 11 GW in late 2024, a level slightly over its projected maximum demand for 2025.
Pennsylvania is considering creating a clearinghouse for data centre power requests to clarify the process, a representative of the governor’s office told a recent industry panel.
Large tech companies have been planning tens of billions of dollars in data centre investments as they seek to create large customer bases around their AI offerings, but the speculative plans may be changed amidst industry and economic fluctuations.
Chinese AI start-up DeepSeek in January unveiled high-performance models that require a fraction of the computing power of rivals to train and operate, raising questions around tech giants’ capital expenditures.
Microsoft, which has announced AI capital expenditure plans worth $80bn for this year, has pulled back from 2 GW worth of data centre projects in the US and Europe in the past six months, TD Cowen analysts said in a recent note.
