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U.S. Data Center Power Demand is straining electric utilities and grid reliability as AI, cloud computing, and streaming surge, driving transmission and generation upgrades, demand response, and renewable energy sourcing amid rising electricity costs.

Key Points

The rising electricity load from U.S. data centers, affecting utilities, grid capacity, and energy prices.

✅ AI, cloud, and streaming spur hyperscale compute loads

✅ Grid upgrades: transmission, generation, and substations

✅ Demand response, efficiency, and renewables mitigate strain

U.S. electric utilities are facing a significant new challenge as the explosive growth of data centers puts unprecedented strain on power grids across the nation. According to a new report from Reuters, data centers' power demands are expected to increase dramatically over the next few years, raising concerns about grid reliability and potential increases in electricity costs for businesses and consumers.

What's Driving the Data Center Surge?

The explosion in data centers is being fueled by several factors, with grid edge trends offering early context for these shifts:

• Cloud Computing: The rise of cloud computing services, where businesses and individuals store and process data on remote servers, significantly increases demand for data centers.
• Artificial Intelligence (AI): Data-hungry AI applications and machine learning algorithms are driving a massive need for computing power, accelerating the growth of data centers.
• Streaming and Video Content: The growth of streaming platforms and high-definition video content requires vast amounts of data storage and processing, further boosting demand for data centers.

Challenges for Utilities

Data centers are notorious energy hogs. Their need for a constant, reliable supply of electricity places  heavy demand on the grid, making integrating AI data centers a complex planning challenge, often in regions where power infrastructure wasn't designed for such large loads. Utilities must invest significantly in transmission and generation capacity upgrades to meet the demand while ensuring grid stability.

Some experts warn that the growth of data centers could lead to brownouts or outages, as a U.S. blackout study underscores ongoing risks, especially during peak demand periods in areas where the grid is already strained. Increased electricity demand could also lead to price hikes, with utilities potentially passing the additional costs onto consumers and businesses.

Sustainable Solutions Needed

Utility companies, governments, and the data center industry are scrambling to find sustainable solutions, including using AI to manage demand initiatives across utilities, to mitigate these challenges:

• Energy Efficiency: Data center operators are investing in new cooling and energy management solutions to improve energy efficiency. Some are even exploring renewable energy sources like onsite solar and wind power.
• Strategic Placement: Authorities are encouraging the development of data centers in areas with abundant renewable energy and access to existing grid infrastructure. This minimizes the need for expensive new transmission lines.
• Demand Flexibility: Utility companies are experimenting with programs as part of a move toward a digital grid architecture to incentivize data centers to reduce their power consumption during peak demand periods, which could help mitigate power strain.

The Future of the Grid

The rapid growth of data centers exemplifies the significant challenges facing the aging U.S. electrical grid, with a recent grid report card highlighting dangerous vulnerabilities. It highlights the need for a modernized power infrastructure, capable of accommodating increasing demand spurred by new technologies while addressing climate change impacts that threaten reliability and affordability.  The question for utilities, as well as data center operators, is how to balance the increasing need for computing power with the imperative of a sustainable and reliable energy future.

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ACCC energy underwriting guarantee proposes government-backed certainty for new generation, cutting electricity prices and supporting gas, pumped hydro, renewables, batteries, and potentially coal-fired power, addressing market failure without direct subsidies.

Key Points

A tech-neutral, government-backed plan underwriting new generation revenue to increase certainty and cut power prices.

✅ Government guarantee provides a revenue floor for new generators.

✅ Technology neutral: coal, gas, renewables, pumped hydro, batteries.

✅ Intended to reduce bills by up to $400 and address market failure.

Australian Taxpayers won't directly fund any new power plants despite some Coalition MPs seizing on a new report to call for a coal-fired power station.

The Australian Competition and Consumer Commission recommended the government give financial certainty to new power plants, guaranteeing energy will be bought at a cheap price if it can't be sold, as part of an electricity market plan to avoid threats to supply.

It's part of a bid to cut up to $400 a year from average household power prices.

Prime Minister Malcolm Turnbull said the finance proposal had merit, but he ruled out directly funding specific types of power generation.

"We are not in the business of subsidising one technology or another," he told reporters in Queensland today.

"We've done enough of that. Frankly, there's been too much of that."

Renewable subsidies, designed in the 1990s to make solar and wind technology more affordable, have worked and will end in 2020.

Some Coalition MPs claim the ACCC's recommendation to underwrite power generation is vindication for their push to build new coal-fired power plants.

But ACCC chair Rod Sims said no companies had proposed building new coal plants - instead they're trying to build new gas projects, pumped hydro or renewable projects.

Opposition Leader Bill Shorten said Mr Turnbull was offering solutions years away, having overseen a rise in power prices over the past year.

"You don't just go down to K-Mart and get a coal-fired power station off the shelf," Mr Shorten told reporters, admitting he had not read the ACCC report.

Energy Minister Josh Frydenberg said the recommendation to underwrite new power generators had a lot of merit, as it would address a market failure highlighted by AEMO warnings about reduced reserves.

"What they're saying is the government needs to step in here to provide some sort of assurance," Mr Frydenberg told 9NEWS today.

He said that could include coal, gas, renewable energy or battery storage.

Deputy Nationals leader Bridget McKenzie said science should determine which technology would get the best outcomes for power bills, with a scrapping coal report suggesting it can be costly.

Mr Turnbull said there was strong support for the vast majority of the ACCC's 56 recommendations, but the government would carefully consider the report, which sets out a blueprint to cut electricity bills by 25 percent.

Acting Greens leader Adam Bandt said Australia should exit coal-fired power in favour of renewable energy to cut pollution.

In contrast, Canada has seen the Stop the Shock campaign advocate a return to coal power in some provinces.

The Australian Energy Council, which represents 21 major energy companies, said the government should consult on changes to avoid "unintended consequences".

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Atlantic Canada Energy Regulatory Reform accelerates smart grids, renewables, hydrogen, and small modular reactors to meet climate targets, enabling interprovincial transmission, EV charging, and decarbonization toward a net-zero grid by 2035 with agile, collaborative policies.

Key Points

A policy shift enabling smart grids, clean energy, and transmission upgrades to decarbonize Atlantic Canada by 2035.

✅ Agile rules for smart grids, EV load, and peak demand balancing

✅ Interprovincial transmission: Maritime Link, NB-PEI, Atlantic Loop

✅ Supports hydrogen, SMRs, and renewables to cut GHG emissions

Atlantica Centre for Energy Senior Policy Consultant Neil Jacobsen says the future of Atlantic Canada’s electricity grid depends on agile regulations, supported by targeted research such as the $2M Atlantic grid study, that match the pace at which renewable technologies are being developed in the race to meet Canada’s climate goals.

In an interview, Jacobsen stressed the need for a more modernized energy regulatory framework, so the Atlantic Provinces can collaborate to quickly develop and adopt cleaner energy.

To this end, Atlantica released a paper that makes the case for responsive smart grid technology, the adaptation of alternative forms of clean energy, the adaptation of hydrogen as an energy source, petroleum price regulation in Atlantic Canada and small modular reactors.

Jacobsen said regulations need to match Canada’s urgency around reducing greenhouse gas emissions by 40 to 45 percent by 2030, achieving a net-neutral national power grid by 2035 and ultimately a net-zero grid by 2050 in Canada – and the goal that 50 percent of Canadian vehicle sales being electric by 2030.

“It’s an evolution of policy and regulations to adapt to a very aggressive timeline of aggressive climate change and decarbonization targets,” said Jacobsen.

“These are transformational energy and environmental commitments, so the path forward really requires the ability to introduce and adapt and move forward with new clean renewable energy technologies.”

Jacobsen said Atlantica’s recommendations are not a criticism of existing regulations– but an acknowledgment that they need to evolve.

He noted newer, clearer regulations will make way for new energy sources – particularly a region that has the countries highest rates of dependency on fossil fuels and growing climate risks, with Atlantic grids under threat from more intense storms.

“We have a long way to go, but at the same time, we have a lot to celebrate. Atlantic Canada is leading the country in reducing greenhouse gas emissions,” said Jacobsen.

“There are new ways of producing energy that requires us to be able to be much more responsive and this is an opportunity to create a higher level of alignment here, in Atlantic Canada.”

Jacobsen said Atlantica is looking to aid interprovincial cooperation in providing power, echoing calls for a western Canadian grid elsewhere, through projects like the 500-megawatt, 170-kilometre Maritime Link that transports power from the Muskrat Falls hydroelectric dam in Labrador, through Newfoundland and across the Cabot Strait, to Nova Scotia – or NB Power’s export of electricity to P.E.I., via sub-sea cables crossing the Northumberland Strait.

He noted streamlined regulations may allow for more potential wider-scale partnerships, like the proposed Atlantic Loop project, aligning with macrogrid investments that would involve upgrading transmission capacity on the East Coast to allow hydroelectric power from Labrador and Quebec to displace coal use in the region.

Atlantic Canada has led the way with adaption new renewable technologies, noted Jacobsen, referring to nuclear startups Moltex Energy and ARC Nuclear Canada’s efforts to develop small modular nuclear reactor technology in New Brunswick, as well as the potential of adopting hydrogen fuel technology and Nova Scotia’s strides in developing offshore renewable energy.

“I don’t think we have any choice other than to be forceful and aggressive in driving forward a renewable energy agenda.”

Jacobsen said cooperation between the Atlantic provinces is crucial because of how challenging it is to meet energy demand with heavy seasonal and daily variations in energy demand in the region – something smart grid technology could address.

Smart Grid Atlantic is a four-year research and demonstration program testing technologies that provide cleaner local power, support a smarter electricity infrastructure across the region, more renewable power, more information and control over power use and more reliable electricity.

“It can be challenging for utilities to meet those cyclical demands, especially as grids are increasingly exposed to harsh weather across Canada. Smart girds add knowledge of the flow of electrons in a way that can help even out those electricity demands – and quite frankly, those demands will only increase when you look at the electrification of the transportation sector,” he said.

Jacobsen said Atlantica’s paper and call for modernized regulations are only the beginning of a conversation.

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B.C. LNG Electrification embeds clean hydro and wind power into low-emission liquefied natural gas, cutting carbon intensity, enabling coal displacement in Asia, and opening grid-scale demand for independent power producers and ITMO-based climate accounting.

Key Points

Powering LNG with clean electricity cuts carbon intensity, displaces coal, and grows demand for B.C.'s clean power.

✅ Electric-drive LNG cuts emissions intensity by up to 80%.

✅ Creates major grid load, boosting B.C. independent power producers.

✅ Enables ITMO crediting when coal displacement is verified.

B.C. has abundant clean power – if only there was a way to ship those electrons across the sea to help coal-dependent countries reduce their emissions, and even regionally, Alberta–B.C. grid link benefits could help move surplus power domestically.

Natural gas that is liquefied using clean hydro and wind power and then exported would be, in a sense, a way of embedding B.C.’s low emission electricity in another form of energy, and, alongside the Canada–Germany clean energy pact, part of a broader export strategy.

Given the increased demand that could come from an LNG industry – especially one that moves towards greater electrification and, as the IEA net-zero electricity report notes, broader system demand – poses some potentially big opportunities for B.C.’s clean energy independent power sector, as those attending the Clean Energy Association of BC's annual at the Generate conference heard recently.

At a session on LNG electrification, delegates were told that LNG produced in B.C. with electricity could have some significant environmental benefits.

Given how much power an LNG plant that uses electric drive consumes, an electrified LNG industry could also pose some significant opportunities for independent power producers – a sector that had the wind taken out of its sails with the sanctioning of the Site C dam project.

Only one LNG plant being built in B.C. – Woodfibre LNG – will use electric drive to produce LNG, although the companies behind Kitimat LNG have changed their original design plans, and now plan to use electric drive drive as well.

Even small LNG plants that use electric drive require a lot of power.

“We’re talking about a lot of power, since it’s one of the biggest consumers you can connect to a grid,” said Sven Demmig, head of project development for Siemens.

Most LNG plants still burn natural gas to drive the liquefaction process – a choice that intersects with climate policy and electricity grids in Canada. They typically generate 0.35 tonnes of CO2e per tonne of LNG produced.

Because it will use electric drive, LNG produced by Woodfibre LNG will have an emissions intensity that is 80% less than LNG produced in the Gulf of Mexico, said Woodfibre president David Keane.

In B.C., the benchmark for GHG intensities for LNG plants has been set at 0.16 tonnes of CO2e per tonne of LNG. Above that, LNG producers would need to pay higher carbon taxes than those that are below the benchmark.

The LNG Canada plant has an intensity of 0.15 tonnes og CO2e per tonne of LNG. Woodfibre LNG will have an emissions intensity of just 0.059, thanks to electric drive.

“So we will be significantly less than any operating facility in the world,” Keane said.

Keane said Sinopec has recently estimated that it expects China’s demand for natural gas to grow by 82% by 2030.

“So China will, in fact, get its gas supply,” Keane said. “The question is: where will that supply come from?

“For every tonne of LNG that’s being produced today in the United States -- and tonne of LNG that we’re not producing in Canada -- we’re seeing about 10 million tonnes of carbon leakage every single year.”

The first Canadian company to produce LNG that ended up in China is FortisBC. Small independent operators have been buying LNG from FortisBC’s Tilbury Island plant and shipping to China in ISO containers on container ships.

David Bennett, director of communications for FortisBC, said those shipments are traced to industries in China that are, indeed, using LNG instead of coal power now.

“We know where those shipping containers are going,” he said. “They’re actually going to displace coal in factories in China.”

Verifying what the LNG is used for is important, if Canadian producers want to claim any kind of climate credit. LNG shipped to Japan or South Korea to displace nuclear power, for example, would actually result in a net increase in GHGs. But used to displace coal, the emissions reductions can be significant, since natural gas produces about half the CO2 that coal does.

The problem for LNG producers here is B.C.’s emissions reduction targets as they stand today. Even LNG produced with electricity will produce some GHGs. The fact that LNG that could dramatically reduce GHGs in other countries, if it displaces coal power, does not count in B.C.’s carbon accounting.

Under the Paris Agreement, countries agree to set their own reduction targets, and, for Canada, cleaning up Canada’s electricity remains critical to meeting climate pledges, but don’t typically get to claim any reductions that might result outside their own country.

Canada is exploring the use of Internationally Transferred Mitigation Outcomes (ITMO) under the Under the Paris Agreement to allow Canada to claim some of the GHG reductions that result in other countries, like China, through the export of Canadian LNG.

“For example, if I were producing 4 million tonnes of greenhouse gas emissions in B.C. and I was selling 100% of my LNG to China, and I can verify that they’re replacing coal…they would have a reduction of about 60 or million tonnes of greenhouse gas emissions,” Keane said.

“So if they’re buying 4 million tonnes of emissions from us, under these ITMOs, then they have net reduction of 56 million tonnes, we’d have a net increase of zero.”

But even if China and Canada agreed to such a trading arrangement, the United Nations still hasn’t decided just how the rules around ITMOs will work.

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Renewable Electricity Generation is accelerating the shift from fossil fuels, as wind, solar, and hydro boost the electric power sector, lowering emissions and overtaking nuclear while displacing coal and natural gas in the U.S. grid.

Key Points

Renewable electricity generation is power from non-fossil sources like wind, solar, and hydro to cut emissions.

✅ Driven by wind, solar, and hydro adoption

✅ Reduces fossil fuel dependence and emissions

✅ Increasing share in the electric power sector

The transition to electric vehicles is largely driven by a need to reduce our reliance on fossil fuels and reduce emissions associated with burning fossil fuels, while declining US electricity use also shapes demand trends in the power sector. In 2021, 40% of the electricity produced by the electric power sector was derived from non-fossil fuel sources.

Since 2007, the increase in non-fossil fuel sources has been largely driven by “Other Renewables” which is predominantly wind and solar. This has resulted in renewables (including hydroelectric) overtaking nuclear power’s share of electricity generation in 2021 for the first time since 1984. An increasing share of electricity generation from renewables has also led to a declining share of electricity from fossil fuel sources like coal, natural gas, and petroleum, with renewables poised to eclipse coal globally as deployment accelerates.

Includes net generation of electricity from the electric power sector only, and monthly totals can fluctuate, as seen when January power generation jumped on a year-over-year basis.

Net generation of electricity is gross generation less the electrical energy consumed at the generating station(s) for station service or auxiliaries, and the projected mix of sources is sensitive to policies and natural gas prices over time. Electricity for pumping at pumped-storage plants is considered electricity for station service and is deducted from gross generation.

“Natural Gas” includes blast furnace gas and other manufactured and waste gases derived from fossil fuels, while in the UK wind generation exceeded coal for the first time in 2016.

“Other Renewables” includes wood, waste, geo-thermal, solar and wind resources among others.

“Other” category includes batteries, chemicals, hydrogen, pitch, purchased steam, sulfur, miscellaneous technologies, and, beginning in 2001, non-renewable waste (municipal solid waste from non-biogenic sources, and tire-derived fuels), noting that trends vary by country, with UK low-carbon generation stalling in 2019.

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NDC Renewable Energy Ambition drives COP25 calls to align with the Paris Agreement, as IRENA urges 2030 targets toward 7.7 TW, accelerating decarbonization, energy transition, socio-economic benefits, and scalable renewables in Nationally Determined Contributions.

Key Points

Raised 2030 renewable targets in NDCs to meet Paris goals, reaching 7.7 TW efficiently and speeding decarbonization.

✅ Double current NDC renewables to align with 7.7 TW by 2030

✅ Cost effective pathway with jobs, growth, welfare gains

✅ Accelerates decarbonization and energy access per UN goals

We need an oracle to get us out of this debacle. The UN climate group has met for the 25th time. Will anything ever change?

Countries are being urged to significantly raise renewable energy ambition and adopt targets to transform the global energy system in the next round of Nationally Determined Contributions (NDCs), according to a new IRENA report by the International Renewable Energy Agency (IRENA) that will be released at the UN Climate Change Conference (COP25) in Madrid.

The report will show that renewable energy ambition within NDCs would have to more than double by 2030 to put the world in line with the Paris Agreement goals, cost-effectively reaching 7.7 terawatts (TW) of globally installed capacity by then. Today’s renewable energy pledges under the NDCs are falling short of this, targeting only 3.2 TW, even as over 30% of global electricity is already generated from renewables.

The reportNDCs in 2020: Advancing Renewables in the Power Sector and Beyondwill be released at IRENA’s official side event on enhancing NDCs and raising ambition on 11 December 2019.It will state that with over 2.3 TW installed renewable capacity today, following a record year for renewables in 2016, almost half of the additional renewable energy capacity foreseen by current NDCs has already been installed.

The analysis will also highlight that delivering on increased renewable energy ambition can be achieved in a cost-effective way and with considerable socio-economic benefits across the world.

“Increasing renewable energy targets is absolutely necessary,” said IRENA’s Director-General Francesco La Camera. “Much more is possible. There is a decisive opportunity for policy makers to step up climate action, including a fossil fuel lockdown, by raising ambition on renewables, which are the only immediate solution to meet rising energy demand whilst decarbonizing the economy and building resilience.

“IRENA’s analysis shows that a pathway to a decarbonised economy is technologically possible and socially and economically beneficial,” continued Mr. La Camera.

“Renewables are good for growth, good for job creation and deliver significant welfare benefits. With renewables, we can also expand energy access and help eradicate energy poverty by ensuring clean, affordable and sustainable electricity for all in line with the UN Sustainable Development Agenda 2030.

IRENA will promote knowledge exchange, strengthen partnerships and work with all stakeholders to catalyse action on the ground. We are engaging with countries and regions worldwide, from Ireland's green electricity push to other markets, to facilitate renewable energy projects and raise their ambitions”.

NDCs must become a driving force for an accelerated global energy transformation toward 100% renewable energy globally. The current pledges reflect neither the past decade’s rapid growth nor the ongoing market trends for renewables. Through a higher renewable energy ambition, NDCs could serve to advance multiple climate and development objectives.

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