A fraction of proposed data centers will get built. Utilities are wising up.

AI generated summary

The U.S. grid is currently inundated with numerous data center proposals, many of which are unlikely to be realized. This situation complicates planning for utilities and grid operators, as they face a significant discrepancy between interconnection requests and actual data center constructions. Experts estimate that for every data center built, there are five to ten requests, leading to challenges in accurately forecasting power demand. The RAND Corporation's projections for AI-sector power consumption by 2030 vary widely, with some estimates suggesting consumption could reach 347 GW, while others predict it to be under 100 GW. This uncertainty creates difficulties for utilities in determining which requests are legitimate and how to allocate resources effectively.

Utilities are adopting various strategies to manage the influx of speculative requests, including standardized interconnection processes and requiring larger financial commitments from developers. However, the lack of transparency in the development process, where developers often conceal their activities, exacerbates the issue. Some utilities are exploring new rate structures to ensure that data centers contribute fairly to infrastructure costs, while others are advocating for a standardized approach to interconnection that could reduce speculative requests. Despite these efforts, the challenge remains significant, as developers continue to leverage the system to secure advantageous positions in the interconnection queue.