West Texas, from the oil rigs of the Permian Basin to the wind turbines spinning above the High Plains, has long been a magnet for companies seeking fortunes in the energy sector.
Now, those dry ranch lands offer a new opportunity to make money: data centers.
Lancium, a data center and energy management company based in Fort Stockton and Abilene, is one of many companies across the country betting that building data centers near generation sites will allow them to take advantage underused clean energy.
“It's a land grab,” said Lancium president Ali Fenn.
In the past, companies built data centers near Internet users to better meet consumer requests, such as streaming a show on Netflix or playing a cloud-hosted video game. But the growth of artificial intelligence requires huge data centers to train the evolving models of large languages, making proximity to users less necessary.
But as more such sites begin to appear in the United States, new questions arise about whether they can meet demand while operating sustainably. The carbon footprint generated by building the hubs and racks of expensive IT equipment is substantial in itself, and its energy needs have increased considerably.
Just a decade ago, data centers consumed 10 megawatts of power, but today 100 megawatts are common. The Uptime Institute, an industry advisory group, has identified 10 large cloud computing campuses in North America with an average size of 621 megawatts.
This growth in electricity demand occurs as manufacturing in the united states It is the highest in the last half century and the electrical grid is increasingly overloaded.
The Uptime Institute predicted in a recent report that the sector's myriad net zero targets, which are self-imposed benchmarks, would be much harder to meet in the face of this demand and that backtracking could become common.
“It's not just about data centers,” said Mark Dyson, managing director of RMI, a nonprofit focused on sustainability. “Data centers are a practice round for a much larger wave of load growth that we are already seeing and will continue to see in this country coming from the electrification of industry, vehicles and buildings.”
The data center industry has adopted more sustainable solutions in recent years, becoming a major investor in renewable energy at the corporate level. Sites that leased wind and solar capacity jumped 50 percent year after year from early 2023, to more than 40 gigawatts, capacity that continues to grow. Still, demand exceeds those investments. And the need for more processing power is supporting the interconnect queue and creating workarounds.
Fully operational, power-hungry data centers further complicate the balance. The data centers under construction, when completed, would use as much energy annually as the San Francisco metropolitan area, according to a report released Wednesday by real estate services company JLL. Most of the sites that will be online this year are already rented; in popular markets, significant space will not open for at least two years.
“You have to get as many gigawatts as possible, as quickly as possible,” said Lancium's Fenn. “People are going to improvise that any way they can.”
That has rapidly expanded development beyond established first- and second-tier markets, such as Northern Virginia, Dallas and Silicon Valley.
Competition is growing in parts of the country that offer cheap land and available power. Amazon, for example, announced last month that it was planning a 10 billion dollar project in Mississippithe state's largest economic development project, including data centers and solar generation sites.
“Anyone who has a significant source of energy has now become a new data center market,” said Jim Kerrigan, CEO of North American Data Centers, an industry consulting firm.
ai is only a small percentage of the global data center footprint. The Uptime Institute predicts that ai will skyrocket to 10 percent of the sector's global energy use by 2025, from 2 percent today.
“They've been building at a rapid pace with many other types of demand drivers,” said Andy Lawrence, the institute's executive director of research. “ai is kind of foam on top.”
Last year, Data center construction increased 25 percent., according to the real estate agency CBRE. And Nvidia, which supplies most of the high-tech chips that power this technology, last week reported record gains in data center saleswith revenue in 2023 reaching $47.5 billion, an increase of 217 percent from the previous year.
The country's power grids can't handle that kind of demand, said Christopher Wellise, vice president of sustainability at Equinix, a global data center operator. “technology is advancing faster than our infrastructure has evolved,” he said.
Equinix, which operates 260 data centers worldwide, installed fuel cells from Bloom Energy to help provide backup power to many of its data centers. The company is also reducing emissions by adding more renewable energy to the grid, for example through power purchase agreements, and has achieved 5 percent greater efficiency in its operations last year, Wellise said. Design firms like Gensler have been experimenting with new designs that include solid wood to reduce embodied carbon in data centers.
And ai itself can help: In a data center in Frankfurt, Equinix has used the technology to moderate cooling loads and adjust energy use based on climate changes, making a data center a 9 percent more efficient.
Niklas Sundberg, a sustainable IT expert and chief digital officer at Kuehne + Nagel, a Swedish transport and logistics company, said the industry would need to focus on investing in renewable generation capacity.
Some sites have tried to install on-site gas power plants to compensate for deficiencies in the network. It may be cleaner than existing energy, but it adds to the industry's significant carbon footprint.
And lawmakers have proposed more transparency and action. The Senate presented a proposal in early February to Assess the environmental impact of ai. Lawmakers in Northern Virginia, known as Data Center Alley, have pushed to require sustainability goals for data centers.
Suhas Subramanyam, a Virginia state senator, proposed a series of rules, including one that would require data centers to get at least 90 percent of its energy comes from renewable sources to qualify for subsidies. “I don't want to put my kids in a situation where, 20 years from now, they have to pay some of the bills for things that we thought were a good idea and turned out not to be,” he said.
