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Our stressed-out power grids need help

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The writer is international policy director at Stanford University’s Cyber Policy Center and special adviser to the European Commission

Utility companies are currently facing “code red”. Last week, reports of overstressed power grids made headlines in the US, UK and the Netherlands. New technologies such as crypto mining and artificial intelligence are contributing significantly to higher electricity demands. Hundreds of data centres are in the pipeline, their permits granted and on the way to being operational. But even as capacity grows, governments need to step up to map and reduce the use of natural resources by tech companies.

The global uptake of generative AI means energy use is growing as exponentially as the technology’s capabilities. AI is now expected to consume 10 times more power by 2026 than it did last year; a search on OpenAI’s ChatGPT already requires about 10 times as much electricity as one on Google. But the lack of standardised metrics and the continuing opacity around resource disclosures by companies blights attempts to come up with policies to tackle the crisis.

Even if action is taken today, it will be late arriving. Consider that in West Virginia alone, already planned data centres have been described as needing several large nuclear power plants’ worth of energy to run. Global demand for electricity use by data centres is expected to double between 2021 and 2026, according to the International Energy Agency. For the US, which is home to 33 per cent of the world’s data centres, that will mean an increase from 4 per cent to 6 per cent of its total electricity diet as the cost of operating the servers, as well as cooling them, grows.

While the cooler natural climates in the northern US states, as well as northern Europe, has always been an attraction of building data centres there, warmer US states are now also keen to house the big, black server blocks. The tax revenues and anticipated job creation are one reason why states are luring in tech companies through enticing tax breaks and bespoke energy contracts.

The promise of plentiful future jobs has to be put in perspective, however: a more than $200mn tax cut in Iowa turned out to secure only 50 permanent jobs after Apple built a centre there — that’s an average of $4mn in taxes per created job. Meanwhile, Missouri reports drought but also offers tax breaks for water-hungry data centres. Pressure on water resources thanks to data centres has been a problem for decades — this is hardly a good deal in the long run.

It is remarkable that the sprawling development of data centres has not led to more political pushback. One reason might be the practice of tech companies lobbying for land permits and grid access under the cloak of shell companies or foundations. Forbes uncovered no fewer than 30 data centre projects in the US where user identities were hidden.

What can be done? Filling the legal vacuum on reporting and transparency standards seems a no-brainer. Currently, transparency on who bids for resource use (and the standardised reporting on it) is patchy. Most legislative initiatives end up being watered down. In the US, the 2020 Energy Act instructs government agencies to study the use of energy and water by data centres. California, for example, has a new state law requiring large companies to report on CO₂ emissions by 2027, but not on water or land use — a missed opportunity

Why not be more efficient and ask tech companies themselves to report on their local and global numbers? After all, tech use is global and so is the climate crisis. For all the data that cloud giants store, their own transparency is dismal. A global standard would go a long way in mapping the consumption and footprint of the stock market darlings.

Even OpenAI’s Sam Altman says the future of AI depends on an energy breakthrough. Tech companies are now big investors in energy companies. Meta is betting on batteries, while Google puts its money on geothermal energy sources. Microsoft says it can keep its commitment to being carbon neutral and “water positive” by the end of the decade. But as Christopher Wellise, vice-president of sustainability at Equinix, a global data centre operator, has said, “technology is moving faster than our infrastructure has evolved”.

The pressure on grids and resources may already seem critical, but in the next few years we could see a true disaster unfolding. No hiding behind shell bidders or obscuring of actual usage will prevent people from identifying the big players, who should take more responsibility. Governments need to co-ordinate now to make sure they do.


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