Electric grid faces political roadblocks as it struggles with data center demand

Geoff Bennett:

The war in Iran and the spike in oil and gas prices are again highlighting the world's dependence on fossil fuels and the role that renewable energy sources could play in meeting future needs.

At the same time, demand on the U.S. electric grid continues to grow, but the Trump administration has moved to rollback subsidies and incentives for some renewables, including solar. A new industry report finds solar installations fell 14 percent over the past year.

Our science correspondent, Miles O'Brien, reports on the effort to build more capacity for the nation's power needs. It's part of our periodic series Tipping Point.

Miles O'Brien:

Forty miles south of San Antonio, Texas, near the small town of Christine, the San Miguel Electric Cooperative Plant, built more than 40 years ago, burns lignite coal, the lowest-grade, most carbon-intensive fossil fuel.

The lignite is strip-mined from the land surrounding the plant, feeding a relentless loop of extraction, combustion, and air, water, and climate pollution.

Craig Courter was the general manager and CEO.

Craig Courter, Courter Energy LLC:

It's harder to burn, takes a lot more furnace, takes a lot more prep. It is hard to make electricity from lignite.

Miles O'Brien:

Courter invited me over for his famous brisket. He's good at fanning all kinds of flames to suit his desires. While we savored his delicious output, he told me about his ambitious plan to replace the old coal plant with solar photovoltaics.

Craig Courter:

They're getting cheaper and cheaper. They are competitive, and a lot of people like them. The cooperative model is, how can we produce this reliably at the lowest cost possible for our end customer?

Miles O'Brien:

And solar is now the cheapest option. To match the output of the old coal plant, Courter planned a 400-megawatt solar farm, paired with 200 megawatts of battery storage.

During the Biden years, he secured a $1.4 billion federal loan to fund the transition through a program created by the Inflation Reduction Act. While the San Miguel Cooperative has not had its loan clawed back, the Trump administration is determined to unwind Biden's push toward renewables.

President Donald Trump:

We're getting rid of the falsely named renewables. By the way, they're a joke. They don't work.

Miles O'Brien:

Despite the rhetoric, coal-fired power plants now account for only about 16 percent of U.S. power generation, while utility-scale solar is the fastest-growing source. Almost 70 gigawatts of new capacity are slated to come online in the next two years. Worldwide, solar is now the dominant source of new power coming onto the grid.

Craig Courter:

As time progresses, I've seen energy go from extremely dirty to very clean.

Miles O'Brien:

The transition project in Christine is still on track, even though Courter has moved on. He's now in the business of helping tech companies find locations and determine the best generation method for power-thirsty data centers.

Craig Courter:

It's a new gold rush. You have everybody and their dog trying to jump into the data center and A.I. game.

Miles O'Brien:

To meet urgent data center demands, energy experts say new renewables, along with natural gas generation, will have to be deployed as quickly as possible. And yet:

Craig Courter:

They're out at 2027 to 2030 and beyond to be able to deliver these gas turbines that we need.

Miles O'Brien:

A utility-scale solar project can be online in one to two years. Building a gas plant takes much longer. The waiting list to buy a gas turbine generator is now at least three years and in many cases twice that. Site selection and permitting add even more time.

But the experts say wind, solar and battery storage are not yet able to deliver the 24/7 power the A.I. industry demands.

GE Vernova, one of the world's largest gas turbine suppliers, is working through a backlog exceeding 80 gigawatts. Pablo Koziner is the chief commercial and operations officer.

So it's a good time to be in the gas turbine business, isn't it?

Pablo Koziner, Chief Commercial and Operations Officer, GE Vernova: It's a great time to be in energy.

Miles O'Brien:

For the past 20 years, the business has grown about 1 to 2 percent a year. But the flat line is now a hockey stick, along with the demand.

Pablo Koziner:

So, in the U.S. alone, what we expect is that we will need 50 percent more electric power in the next 20 years. That's a staggering number. And we haven't seen that type of growth since the 1950s, right after World War II.

Miles O'Brien:

Tech companies are demanding many gigawatts of power as soon as possible.

Bobby Hollis, Vice President of Energy, Microsoft: This is absolutely a new moment for the U.S. energy sector.

Miles O'Brien:

Bobby Hollis is the vice president of energy at Microsoft. The company has struck a power purchase deal with the owner of the Three Mile Island nuclear plant in Pennsylvania. It would mean a mothballed reactor there would come back online to generate power for A.I.

What are the projections you see for the rising demand for artificial intelligence, large language models?

Bobby Hollis:

We know that there's for sure growth happening on the A.I. sector. We know it's going to be larger probably than cloud is now, but cloud is still in the single digit percentages as far as global energy consumption.

Miles O'Brien:

Others are offering more specific guesses. OpenAI CEO Sam Altman recently predicted that his company alone could consume 250 gigawatts of electricity by 2033, roughly equivalent to India's current total power capacity.

Sam Altman, CEO, OpenAI:

In terms of long term strategic investments for the U.S. to make, I can't think of anything more important than energy.

Miles O'Brien:

Tech companies are scrambling to find data center locations. One of the biggest moves so far, Microsoft's $7 billion investment in Mount Pleasant, Wisconsin, where it is building one of the largest and most powerful data centers in the United States.

Bobby Hollis:

Wisconsin presented an incredible opportunity for us to come in because there was surplus capacity and surplus infrastructure that could serve us quickly and allow us to build and to do it in a way that actually reduced costs for those customers.

Miles O'Brien:

But Microsoft is facing strong opposition to many proposed projects. There are concerns about increased carbon emissions, water consumption and the rapidly rising cost of electricity.

In Wisconsin, the company is vowing to foot the bill for grid upgrades, transmission, and additional generation capacity needed to serve its load. In some states, regulators are requiring their most power-hungry customers to absorb the added cost. But in other unregulated states, that is not the norm.

Energy analyst Katherine Hamilton:

Katherine Hamilton, Cornell Atkinson Center for Sustainability: Whether it's transmission build out or distribution build-out or new power plants, all customers foot the bill for that.

Miles O'Brien:

Residential utility bills have risen almost 30 percent since 2021. But Hamilton says data centers are just one of many reasons.

Katherine Hamilton:

Prizes are going up because of wildfire mitigation. Utilities are investing in storm recovery. This is where things like the tariffs make a big difference, because there's a lot of equipment out there that is in a global market that we're having trouble getting at a good cost.

Miles O'Brien:

In addition, utilities nationwide have been investing heavily in upgrading our century-old grid. As it turns out, GE's fastest growing business is building all the devices that connect power plants to the grid, transmission equipment, energy storage, and software to improve efficiency.

Pablo Koziner:

That's a very quick way to release more capacity. Now, some of that you can do with the help we provide through software and upgrades and transmission. But a lot of that also depends on regulation and permitting and a lot of other things that have to enable that.

Miles O'Brien:

The country is suddenly hungry for more power, much more. It's an urgent need that can be met. But experts in the industry, like Craig Courter, say it won't happen unless others start thinking out of the political box, like they are at the San Miguel Electric Cooperative.

For the "PBS News Hour," I'm Miles O'Brien in Christine, Texas.