Utility Dive
$25,000 Triple Match & E-Bike Giveaway! Donate by 4/22
Donate Here
$25,000 Triple Match & E-Bike Giveaway! Donate by 4/22
Donate Here 
The explosive growth of data centers is transforming the U.S. energy sector, and nowhere is this shift more pronounced than here in the Midwest. With affordable land, low electricity costs, and abundant freshwater, the region has become a prime destination for data center expansion.
U.S. Department of Energy (DOE) reports show that in 2023, data centers were responsible for 4.4% of all U.S. energy consumption – more than the entire state of New York. Its projections estimate that the demand of additional data centers could double or triple by 2028, essentially tasking the U.S. grid with powering several new states in just a few years. This comes in stark contrast to the decades of steadily declining energy demand that the U.S. previously enjoyed, thanks to improvements in efficiency despite continual economic growth.
2024 United States Data Center Energy Usage Report, Lawrence Berkeley National Laboratory
The challenges this presents are twofold. First, utility companies are pointing to this projected load growth as justification for adding new fossil gas and extending the lives of costly and highly polluting coal plants that were otherwise set to retire. For example, one utility in Indiana has filed plans to add over 5,000 MW of natural gas by 2034. This “rush to gas” is incompatible with our climate goals and jeopardizes the progress we’ve made in reducing emissions over the past decade.
Second, this increase in load growth also requires huge investments to expand the capacity of our transmission and distribution systems, the costs for which are typically socialized among ratepayers like you and me. New policies are needed to ensure large-load customers like data centers pay their fair share of this grid expansion.
Before we dive in, let’s preface with a few reasons for optimism.
That said, here’s how ELPC is working to ensure that the data-driven economy is powered by clean, sustainable energy, without unnecessary risks to the ratepayer.
Meeting growing demand for electricity doesn’t have to mean building more power plants. A more nimble, responsive grid can maximize existing resources, putting energy to use that might otherwise be wasted. ELPC is advocating for solutions that can immediately curb demand and increase the efficiency of the existing power grid without requiring massive new investments.
For an example of ELPC’s impact, see how attorney Nick Wallace secured a settlement requiring Illinois utility Ameren to incorporate GETs into its planning.
Energy efficiency and demand response are low-hanging fruit that will help reduce the need for new infrastructure. For example, Duke University researchers recently demonstrated that load flexibility could significantly increase the capacity of the existing grid to accommodate new load. DERs and other technologies can also enhance grid efficiency, making the grid leaner,
faster, and more adaptable to serve new loads:
These “no regrets” solutions can help utilities buy some time to assess the accuracy of load growth projections before committing millions in ratepayer dollars to new infrastructure that may ultimately be unnecessary.
Once we can better predict load growth, the next step is ensuring that growth is powered by clean energy. This can take different forms.
ELPC advocates for data centers to build their own clean energy sources to power their own operations. Building new renewables and storage on-site or “on campus,” which ensures electricity is generated where it is consumed, offers a few key benefits: faster deployment, avoidance of transmission constraints, and reduced infrastructure costs.
On-site renewables and storage offer the best-case model for powering data centers with clean energy. In what we hope is a growing trend, some companies like Google are leading the way with “energy parks” that co-locate data centers with behind-the-meter renewables and storage.
In addition, data centers can match their energy use by pairing new load with clean generation elsewhere on the grid. This approach involves partnering with clean energy developers to build renewable facilities paired with energy storage, ensuring real-time, around-the-clock alignment with their energy consumption. This helps to offset the data center’s impact on the grid, ensuring new loads entering the system don’t contribute to reliability or resource adequacy risks, which would otherwise disrupt supply-demand equilibrium and drive up prices for all users.
There are several emerging mechanisms that can help carry out 24/7 clean energy sourcing – one of which is called Clean Transition Tariffs (CTTs). CTTs incentivize large-load customers to invest in more firm, clean power sources like geothermal and storage, in addition to solar and wind. In return, these customers receive fixed-rate energy from those projects, providing price stability against market volatility.
For example, Google also partnered with NV Energy to power its data center with 24/7 clean energy from an enhanced geothermal project. The agreement involves purchasing 115 MW of geothermal power from Fervo’s Corsac Station, helping Google offset energy demand charges for its data centers.
State Public Utility Commissions (PUCs) play a crucial role in determining how utilities will meet rising energy demand. Across the region, commissions are now discussing new tariffs and rate structures to accommodate massive new data center loads.
ELPC is actively engaged in key cases across the Midwest to ensure that large-load customers pay their fair share and that data center growth drives clean energy investment, rather than continued reliance on fossil fuels. Some examples include:
When we find innovative solutions that benefit all stakeholders, we are uniquely positioned to replicate them across Commissions throughout the Midwest, driving regional change. By prioritizing smart policy, cooperation, and innovation, we can ensure that the rise of data centers accelerates the clean energy transition, rather than derailing it.