The data center industry has operated largely in the shadows for three decades, initially building server closets in office basements and later the infrastructure supporting credit cards, digital health records, social media, and streaming services. However, the emergence of AI technology has thrust the industry into the spotlight, significantly increasing energy demands and prompting updated regulations for grid access and cost allocation.
As Big Tech companies race to develop advanced AI systems, Ning Lin, chief economist at the Bureau of Economic Geology at The University of Texas at Austin, describes this shift as a new era of data centers. Lin’s comments were made during a conference on powering AI at the Federal Reserve Bank of Dallas.
Data centers now require massive hyperscale facilities, using up to a gigawatt of electricity, becoming synonymous with the AI race. Andrew Schaap, CEO of Aligned Data Centers, compares the industry’s growth and complexity to the Industrial Revolution, with some projects costing up to $10 billion.
Data center developers are now required to rapidly meet clients’ demands, with facilities becoming operational within 90 days, a stark contrast to the years needed previously. Schaap notes the shift in utility usage, with data centers now consuming 95% of project-allocated megawatts.
Lin outlines the evolution of data centers: from the 1990s to 2010, they supported internal IT and business functions; from 2010 to 2023, they introduced streaming and mobile services with large cloud-computing servers; from 2024 onward, they are powering AI, often requiring gigawatts.
The Electric Reliability Council of Texas (ERCOT) reports rapid growth in energy-intensive data centers, many requesting over a gigawatt per project. Texas tracks over 225 gigawatts of large load interconnections, with data centers comprising more than 70% of these projects. This growth in energy demand echoes Texas’s historical energy challenges with oil and gas refineries.
The increased competition for resources has led to new rulemaking in Texas, with ERCOT and the Public Utility Commission addressing infrastructure cost divisions due to these projects and population growth.
Nationwide, grid operators and data center members are working to distribute existing and new capacities amidst an influx of users. Legacy loads, typically less energy-intensive, shouldn’t automatically have priority over new, wealthier AI developers, says Stu Bresler, CEO of PJM, a regional grid operator.
As data centers expand, they face significant community resistance, particularly in rural areas. Developers are racing to build in areas with fewer regulations to avoid city rules and public processes. From 2024 to 2025, grassroots protests led to over $64 billion in delays and cancellations.
To address community concerns, the data center industry is communicating more with residents about the demands of their projects and their broader societal benefits. Doug Lewin of Google’s Energy Market Development team emphasizes the tangible requirements for various operations, including governments, hospitals, and corporations.
Schaap highlights the industry’s need to connect its operations to public understanding, stressing that the demand driving their projects is evident in everyday technology like cellphones.
Original Story at insideclimatenews.org