Data centers are expected to continue growing at a breakneck pace, doubling their power demand by 2029, according to a new report from JLL.
The industry’s expansion, fueled by the rapid growth of AI alongside the continued expansion of cloud-based services, is testing the limits of the energy sector. Some experts think that half of all new AI servers could be underpowered by 2027.
That’s in large part because utilities and power developers tend to operate on very different timelines. Most large power plants take years to build and commission, and those that are faster to deploy, like solar and wind, have been stymied by long waits to connect to the grid.
Compounding the problem is the fact that data centers tend to be clustered in certain regions, the report said. That concentration threatens to overwhelm local grids. Utilities have been struggling to keep up. Typically, they tend to plan many years, even decades, in advance, expecting slower, linear demand growth. AI’s explosive power needs have thrown many of those plans into disarray.
As a result, many data center developers and operators have begun signing deals directly with renewable developers and nuclear startups.
Google, for example, has begun work on $20 billion worth of renewable power projects to feed several massive data centers. The tech firm also has a contract with nuclear startup Kairos for 500 megawatts worth of carbon-free electricity by the end of the decade. Microsoft, which is also heavily invested in renewables, is working with power provider Constellation to restart a nuclear reactor at Three Mile Island that was shuttered in 2019. And Switch, a data center company, signed an agreement with Sam Altman-backed nuclear startup Oklo for a whopping 12 gigawatts of electricity by 2044.
The challenge will be matching supply with demand, the report notes. While most data centers are sited near major urban areas, building nuclear reactors, no matter how small, is more challenging in those locations. Renewables tend to have easier permitting, but they require more land. And both nuclear and renewables will need new transmission lines, and those take years to build as well.
