More data centers are bringing new challenges for utilities across rural America. Jim Matheson joins us, he’s the CEO of the National Rural Electric Cooperative Association, which represents more than 900 not-for-profit, consumer-owned electric co-ops. He says these co-ops are seeing unprecedented demand from large-scale data center projects, and they’re weighing how to meet that demand while protecting existing customers.
“Electric demand growth historically has had a certain amount of predictability to it where it’s incremental. But you go to a rural electric cooperative that has a certain load of existing consumers, and you bring in a new 800-megawatt data center, and that can be triple what all the other consumers in the electric cooperative consume. So, these are significant amounts that are added all at once in sort of a step function for demand, and they require some interesting consideration about where the power is going to come from, how do you continue to deliver it in a reliable and affordable way, and how do you make sure that your existing consumers are protected from upward price pressures and cross-subsidization.”
Matheson says utilities have been preparing for higher electricity demand coming from manufacturing growth and electric vehicles, for example. But he argues that the ability to build new infrastructure is being slowed by permitting challenges.
“One of our concerns about this growing demand that we face is it is very difficult to get permitting to build things in this country these days, not just electric assets but for many industries. And so, from a public policy standpoint, we’ve been advocating for reform of our permitting process in this country to create a more predictable, reasonable process. We’re not saying get rid of permitting, but let’s have something with a predictable timeline with a defined process for who’s in charge of making decisions and open communication and transparency to make sure the process is moving in a direction that either leads to a thumbs up or a thumbs down but doesn’t lead to just more uncertainty in the future.”
As electricity demand continues to rise, Matheson says utilities will need both new and existing resources to maintain reliability.
“It’s going up, and it’s going up a lot, and it requires a significant amount of new generating capacity to meet that need. It also requires us to stop shutting down power plants that still have useful life, which public policy has been encouraging over the last few years in this country, and we’ve got to stop doing that because we need to make sure we can keep the lights on at an affordable price.”
Despite the growing debate around data centers, Matheson says the issue is not whether or not communities should support them.
“People often ask me as a national association, are you for or against data centers? And I say that’s not the right question, but what we are for is making sure that our utilities have the ability to make the decision that’s right for them in their local community. We don’t like one-size-fits-all mandates on data centers or any other policy, quite frankly, that’s out there. Because different geographic locations have different characteristics, different capacities, different needs, and different challenges. And the extent that you can maintain that autonomy and local control in making decisions from an electric cooperative standpoint, that drives through all of our policy advocacy that we do.”