The energy industry is grappling with dozens of questions about data centers, a hot topic that took center stage on the second day of RBN and Novi’s School of Energy.
Rock Graham, Manager, Origination & Producer Services at NRG Energy, discussed key considerations shaping data center development during a fireside chat at the Houston conference, including how to build projects the right way, navigate constraints, and weigh the potential benefits and concerns surrounding their long-term impact.
Data centers may process information at lightning speed, but getting one built is a slow, complicated undertaking. Before the first server arrives, developers must secure land, fiber connectivity, cooling resources, permits and a dependable energy supply.
Site control is just the beginning. In certain states like Texas and Virginia, developers may not be able to begin pre-permitting work without it. But owning the land is only one piece of the puzzle.
A seemingly ideal location can quickly lose its appeal if it lacks access to pipelines, transmission lines or sufficient power generation. Graham repeatedly emphasized that the questions and concerns surrounding data centers and their future impacts, both positive and negative, are valid. Ultimately, he said, data center development should deliver a net benefit to the grid
Power is often the biggest bottleneck. A large data center can require hundreds of megawatts of nearly uninterrupted electricity. But the pipelines, generating plants and transmission needed to serve it can take four to five years to permit and build.
Interconnection queues at the Electric Reliability Council of Texas (ERCOT) and PJM Interconnection, which coordinates the wholesale power grid across more than a dozen states, are already backed up. This means that more developers are pushing to “bring your own power.”
That sounds simple, but it still requires gas supply, pipeline capacity, plant construction, permits and often a grid connection. Renewables and batteries can help, but data centers cannot tolerate intermittent service, leaving natural gas generation and backup diesel as critical parts of the reliability package.
Then, comes the thorny question of who pays. On August 3, Texas Gov. Greg Abbott ordered a statewide audit of data centers advancing through ERCOT’s interconnection process, reflecting growing concern that facilities claiming to bring their own generation will still rely on the grid and drive up costs for other customers. Regulators want to know whether these facilities can cut demand during emergencies, pay for the infrastructure built to serve them and avoid weakening grid reliability.
The bottom line is that winning the data-center race will require more than land, money and ambitious announcements. Developers must line up energy, infrastructure, financing and regulatory support. Ultimately, they must prove that their projects will strengthen the power system instead of simply adding another enormous load.
