Data centers require an enormous amount of energy. In North Carolina, state regulators are trying to figure out how to meet this unprecedented demand while also protecting the average ratepayer. Earlier this week, the North Carolina Utilities Commission held a two-day 'large load technical conference' to talk about these issues.
This conversation has been edited lightly for clarity.
Let’s start by introducing the players here. Who or what is the North Carolina Utilities Commission? Who was at the meeting this week?
The utilities commission is a five-person regulatory agency. They regulate public utilities in North Carolina, the largest being Duke Energy, which provides energy to the vast majority of the state.
The meeting held this week was focused on how to best serve large load customers like data centers. Several different stakeholders presented their ideas to the commission, including Duke Energy, Dominion Energy, clean energy advocates, and representatives from the data center industry.
In this context, what is the term 'large load'?
A large load customer is a customer that requires a lot of energy. According to a congressional report, data centers across the U.S. in 2023 used about 176 terawatt hours of energy, or about 4.4% of the country’s total electricity consumption that year. Some projections show the energy consumption from data centers could double or triple by 2028.
And why is that? Data centers have been around for years already. Why are they going to need so much more energy now?
Because of the rise of AI. At the meeting this week, I heard over and over again that right now, we're at an inflection point. How we choose to respond to this situation is going to have ramifications on energy production, infrastructure, and on the climate for decades to come.
What else did you hear at this week’s meeting? What are some of your biggest takeaways?
It seems that right now in North Carolina, there are a lot more questions than answers. Some of the biggest questions are: How much more energy are we going to need? By when do we need it? How are we going to generate that energy, and who’s going to pay for it?
Something else that stood out to me is that there are a lot of different balancing acts going on. Political leaders and Duke Energy representatives say data centers want to come to North Carolina because we have such a business friendly climate. These are million, and in some cases, billion dollar investments that provide good paying jobs for local families.
But that economic opportunity has to be balanced with consumer protections. The utilities commission wants to make sure the average person isn’t paying for additional energy infrastructure that’s ultimately meant to support data centers.
This is often what we hear when utilities have to generate more electricity. They talk about raising rates on ratepayers. Did this meeting provide any clarification on whether ratepayers will be paying more?
I think it’s fair to assume that yes, ratepayers can expect to keep seeing higher prices. Duke Energy representatives emphasized that they have to make upgrades to existing resources to increase reliability, while at the same time adding new resources to generate more energy.
Company representatives also really stressed that over the long term, as more large load customers join the system, that should alleviate rates. But it’s my understanding that that downward pressure won’t happen until at least another 15 years.
Another important topic that was discussed is energy generation. How are we going to produce all this energy? Data centers want energy as quickly as possible, and fossil fuels like natural gas and coal can meet this large demand quickly. But we have to remember that there’s a backdrop here of reaching net zero carbon emissions in North Carolina by 2050. Under state law, Duke Energy has to be carbon free by then.
So the balancing act here is how much clean energy do we use, even if it takes longer, versus how much energy from fossil fuels do we use, even though we need to reach net zero? Again, lots of questions that are still being figured out.
