Texas Regulator Wants Data Centers to Build Power Plants

(Bloomberg) -- Texas’ top electricity regulator has a message for Big Tech: If you want to build AI data centers next to power plants, you may have to build the power plant, too. 

Data centers designed to support artificial intelligence can guzzle as much electricity as entire cities, leading some developers to propose building them next to power plants. But Thomas Gleeson, chairman of the Public Utility Commission of Texas, said allowing construction near existing plants threatens resource adequacy on the grid if the data centers buy all the plants’ power. Texas has at times struggled to keep the lights on as its growing economy and population strain supplies.

“We can’t afford to lose any of our resources off the system at this point, especially given those load-growth projections,” Gleeson said in an interview at the Gulf Coast Power Association conference in Austin, where AI dominated the discussion.

Amazon Web Services, for example, in March agreed to spend $650 million for a Pennsylvania data center campus connected to the Susquehanna nuclear plant. And Constellation Energy Corp. plans to reopen its Three Mile Island nuclear plant, selling all the facility’s output to Microsoft Corp.

Gleeson said his agency is telling data center developers they will need to supply some of their own power if they want to connect to the Texas grid within 12 to 15 months. Many of the corporations involved, he said, have among the biggest balance sheets in the world and can afford to fund construction of new power plants. 

“We have to look at really the co-location issue as being a new facility coming with its own new generation,” Gleeson said. 

Developers, he said, could even opt to “over build” — creating power plants that generate more electricity than their data centers need and selling the rest to the grid. “We’re happy to take it,” Gleeson said. 

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