When data center companies turn to EthosEnergy for onsite power solutions, they often make one thing clear: They don’t want to be in the power business.
They simply present their power requirements, and EthosEnergy makes recommendations based on feasibility, efficiency and maintenance needs. EthosEnergy advises which generation technology might suit the customer’s needs. Data center developers may also ask EthosEnergy, an O&M services provider, to operate the onsite plant.
“They’re looking for not only technology, but people, operators who can make sure that they can achieve their reliability and availability goals,” said Daniel Tegtmeier, EthosEnergy’s Performance Center Director.
For data centers, power availability and reliability is everything. Traditionally, backup diesel generators have been the source of onsite power, turning on only in the event of a loss of grid power.
But the era of flat power demand is over, and the game has changed.
Data center development is surging in the U.S., fueled by the demands of artificial intelligence and cloud computing. Shane Mullins, V.P. of Energy Market Solutions at Industrial Info Resources (IIR), said as of early March, there were over 1,900 data center projects in development, with a total investment exceeding $800 billion. He noted that a lot of this announced spend is tied up in multi-building campuses with additions that are planned out to 2035.
IIR tracks these staggering developments and is adjusting its estimates constantly. Mullins said that total investment figure is expected to surpass $1 trillion, with recent announcements from tech giants like OpenAI, Meta, Microsoft, Amazon and Google.
“In 2023, we saw $30 billion in data center capital expenditures (CapEx) move forward. That number skyrocketed to $78 billion last year, and now over $200 billion is scheduled for construction in 2025,” he said.
All of this development presents increasing challenges for the electric grid to keep up. Mullins pointed out that many new data centers under construction likely won’t have sufficient grid power, at least in the next 24 months. He explained that where transmission constraints exist, companies are developing their own power sources.
“The mantra in Texas is, ‘You can build a data center, but you need to provide your own power,’” he said.
Mullins said one data center developer is adding Solar Turbines’ Titan 130 gas turbines at their campus in Sterling, Virginia. He cited another project in Abilene, Texas, which will include onsite turbines from GE and Solar Turbines.
Due to delays in securing a partial or full grid connection, companies are also increasingly relying on this gas-fired generation as their primary power source, rather than just for peak demand.
“Even when grid connections are possible, it can be more cost-effective to generate power on-site rather than purchase from the grid,” said Tegtmeier.
Some companies are taking it a step further, Tegtmeier added, and operating as microgrids without a grid connection.
“For AI applications, power must always be on,” he said. “Many of them, the power plants tied to data centers, they’re being islanded due to remote nature of the location.”
So of the prime movers, which is the big winner of the data center sweepstakes so far?
The short answer is, availability is king, and proven technology seems to be preferred.
In response to the skyrocketing demand, utilities are planning to build more gigawatt-scale gas plants. The long lead times for large-frame gas turbines and related equipment are well-known.
But the lead times for even small turbines are increasing. Data centers like fast-dispatch turbines like Solar Titans for onsite power. Reciprocating engines are also a common option because of their simpler manufacturing process, but because they require more maintenance than turbines, they may be less practical for continuous use.
Tegtmeier adds that sustainability remains a priority, with many data centers investing in dry low NOx (DLN) units and selective catalytic reduction (SCR) systems to reduce emissions.
“[Sustainability] is still a big desire of data centers by nature,” said Tegtmeier. “They want to still maintain that green outlook for that facility.”
