Austin Energy planning for 'tremendous strain,' possible billing impacts from new data centers

Those new facilities are now seeking to open with much higher electric service needs and on faster timelines than ever before, city staff said.

Austin Chief Information Officer Kerrica Laake reported those growth trends in data center development carry "significant challenges" for AE.

"Utilities in Central Texas have been able to keep up with traditional high growth for decades; however, AI is challenging the definition of high growth," she said in a December memo. "The speed in which AI is trying to be deployed creates tremendous strain on the already tight resources in both design and construction."

By the numbers

In the past, the typical proposed data center may have only added up to 30 megawatts to Austin's grid—equivalent to the amount needed to power about 6,000 homes, according to AE. Now, data centers "routinely" seek 10 times that amount or more.

Some facilities are requesting as much as 5,000-11,000 MW, or 5-11 gigawatts, according to the city. The entire peak load of AE's system today, representing about 570,000 customers, is just over 3 GW.

Similar impacts are being felt statewide. The peak statewide demand of the Electric Reliability Council of Texas, or ERCOT, is now about 85 GW. The power grid operator expects that to nearly double in just a few years, largely led by data center additions, with more than 70 GW of new load projected by 2028.

"I heard someone describe this as the wild, wild west; it is to some degree. I’m third-generation utility, and it’s never been like this," said David Tomczyszyn, AE's vice president of electrical system engineering and technical services. "The size of these loads and how fast they’re looking to come on ... it’s tremendous."

The cost

It remains to be seen how many major data center plans will materialize around Austin in the near future. The addition of large users to the grid could end up impacting AE's electricity rates as those facilities come online, officials said.

Base utility rates could see "upward pressure" due to the new infrastructure, inflation and related costs, Laake reported. Other charges could also be affected by changes across the state power grid, from congestion in transmission lines to shifting renewable energy consumption trends.

AE also has strategies in place to minimize risks and add more generation and storage capacity amid the technology changes. And despite some concerns, Laake said data centers could play a role in Austin's move toward more clean energy use by resulting in a strengthened grid as development takes place.

Zooming in

AE has an obligation to provide for power customers in its service area and allow for connections to its transmission lines under the Public Utility Commission of Texas. Connections can depend on the state requirements for larger-scale projects.

Data center proposals remain confidential until they're formally established through ERCOT's process, but Tomczyszyn said AE is fielding "quite a few" for Austin-area plans at a larger scale than ever.

"We have an obligation to serve you, but you want a third of all the power in Austin, equivalent to it, and you want it in 18 months," he said of the facilities.

In response to the data center rush, state lawmakers passed Senate Bill 6 this year to increase regulations on larger electric users. The law enacted new standards for customers requesting to connect 75 MW or more, like data centers, and other policies meant to reduce strain on the grid during high-use times.

Tomczyszyn said SB 6 represented state utility regulators "hitting the brakes" on major projects to protect existing customers and grid stability. However, he also said the new requirements simply led several proposals to be revised just below the 75 MW cap to continue without the added oversight.

AE requires only less intense screening studies for smaller loads coming onto its system. However, major users will not be allowed to come online until upgrades that protect current customers are complete. For now, Tomczyszyn said keeping customers' lights on is the utility's top priority and that state-level efforts may prove effective.

"We’ll see how it goes. It’s very much interesting times, but I feel a little bit better because of some of the brakes everybody’s putting on, not to stop AI but just to slow it down a little bit to make sure we’re doing it in the right way," he said.

One more thing

Austin's AI impact report also covers impacts to the city water system, clean energy goals and various other responses to the technology. Laake's full memo is available online.

Hannah Norton contributed to this report.