From advanced manufacturing to hyperscale data centers, many modern industrial developments are requiring unprecedented levels of energy – and the demand is growing exponentially. A panel of experts at I.CON West this week moderated by Angela Gomez-Jones, RPA, CPM, partner, Endeavor Agency, discussed the challenges in locating and securing power, as well as strategies to overcome grid constraints, improve energy efficiency and use artificial intelligence to model and plan power needs.
Joining Gomez-Jones were Amanda Criscione, vice president, development, Link Logistics Real Estate; Mike Englhard, chief development officer, TeraWatt Infrastructure; John Gaglio, president, Newport Utility Consulting; and Matthew Goelzer, AIA, LEED AP, principal, MG2.
The number of U.S. data centers has more than doubled between 2018 and 2021. Fueled by investments in AI, that number has already doubled again, began Gomez-Jones, sharing a statistic from the Lincoln Institute of Land Policy.
Goelzer doesn’t see demand slowing anytime soon, even as available land and power constraints begin to throttle development: “AI demand is going to continue to drive it … We’re anticipating in the next five years you’re going to see more bumps in efficiency that’ll allow us to go back and retrofit existing centers to be able to drive more power through,” said Goelzer.
Gomez-Jones asked Gaglio to compare the energy demands of data centers to a typical residential site or office building. “Data centers compared to everything else – it’s absolutely astronomical the amount of power [required]. I like to compare it to an aircraft carrier relative to a small sailboat.”
However, many buildings are initially built with transformers much larger than what is required for the actual demand load of the tenant. “I think what you’re going to start to see are utilities utilizing AI to study the demand load of every building and then we might start to see things like transformers being downsized to free up capacity in the grid,” said Gaglio.
“We’re also starting to see utilities charge you if you’re not using the power,” said Goelzer. If a developer requests a certain amount of power and only uses a fraction of it, a utility may bill the developer back for the infrastructure they built to support the power usage originally projected.
“Even with electric vehicle charging [facilities], we’re having to put up bonds or deposits for three years of our utility bill that we say we are going to use,” Goelzer added. He’s seen these range anywhere from $200,000 to $1 million.
“We’ve done a sweep of our existing assets to get an understanding of what we have today and what we need to do to build for the future,” said Criscione. “We’re very cognizant of power and the race to get it, but we’re also making sure that we’re educating ourselves to know that we are providing ample amount of power but allowing for flexibility so that we’re not in a situation where we’re saying we need more than we do.”
Gaglio agreed with Link Logistics’ approach, and emphasized the importance of early, accurate planning. Developers who bring utilities precise load data and not inflated worst-case estimates secure power far more quickly.
As power needs surge, utilities are struggling to keep up. Power grids designed decades ago are not designed for the loads needed today.
Englhard shared that representatives from Southern California Edison said, “‘For the last 50 years, we have had a half-percent increase in demand every year… Four years ago, that went from half a percent a year to 4% a year.’” The steep increase in demand caught the utility flat-footed, but they’re working to catch up; there are a lot of advancements happening to the grid in California and elsewhere, he said.
Meanwhile, grid congestion has forced some developers to go offsite to find available capacity, with major users stretching up to nine miles away to connect to power – an extremely costly solution. “The cost of that comes at about $2.5 million/mile to run those ducts without pulling any wire – just to get the pathway there,” Englhard added.
On the plus side, Goelzer said he’s found that when he talks to city leaders, they often understand what developers are up against in terms of securing power supply.
“As long as we’re able to demonstrate that we’re ready to go when power is ready to be there, we find that most cities are willing to meet us in that spot.” He stressed the importance of having real conversations, understanding the city’s priorities, and building relationships.
If you do that, “you can still move projects forward, because I think as a community, we all understand what we’re up against.”
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