Seated at the dais in the Georgia Public Service Commission’s low-slung hearing room, Chairman Jason Shaw seemed perplexed.
It was a Tuesday in January 2024.
Only six months earlier, Georgia Power had completed the first new nuclear reactor at Plant Vogtle, bringing enough electricity online for hundreds of thousands of homes. A year before that, the utility received approval to add thousands of megawatts of power to its fleet. The company wasn’t expected to ask approval for more until 2025.
But to Shaw’s right, a panel of Georgia Power experts explained that they’d soon need to generate much more electricity.
“I’ll be honest … I’m still kind of scratching my head on how we ended up here,” Shaw said.
Soon, the reason was clear: data centers.
The server-packed warehouses are the nerve centers of artificial intelligence and our digital lives. And right now, there is no hotter destination for them than Atlanta.
Last year, the metro area was the country’s top market for data center leasing.
The data center industry says the facilities create jobs and dramatically boost local tax revenues, allowing communities to invest in projects that benefit all residents. But as they flock to the Peach State, they are bringing their enormous energy and water demands with them, raising questions about how they’ll affect other customers.
Dan Diorio, vice president of state policy for national trade association Data Center Coalition, called the facilities a “win-win” for local governments.
“Data centers come in and they pump a lot back into the community without draining services,” Diorio said. For projects of their scope, they don’t overcrowd roads with trucks or stress school systems.
For the last year and a half, their electricity needs have dominated PSC proceedings involving Georgia Power, the state’s largest electric utility. They’ve been a hot topic at the General Assembly, spurring bills and special study committees. City councils and county commissions have seen packed hearing rooms on rezoning requests.
The industry, utilities and regulators have pledged data centers will pay their fair share of the infrastructure costs they incur.
Not everyone is so sure.
“They get first priority, and they build redundancy,” said Roy McGee, a Coweta County retiree living near a site slated for one of Georgia’s largest data center proposals. “What happens to the rest of us? We’re going to be sitting there sweating in the summertime when their load peaks.”
Credit: Miguel Martinez-Jimenez
Credit: Miguel Martinez-Jimenez
Energy worries
Data center operators consider many factors in deciding where to locate.
They need land to build on and water to cool their servers. Tax breaks, like the ones that exist in Georgia, can also help sweeten the deal.
But at the very top of the list is electricity.
“They’re starting with power first,” Gil Shearouse, executive director of the Douglasville-Douglas County Water & Sewer Authority, told a state House Special Committee studying data centers in July. “Everything else kind of flows from there.”
That’s because they need lots of it. Data centers use 10 to 50 times as much energy as a typical office building with the same square footage, according to the U.S. Department of Energy.
Ones used to train artificial intelligence models are the most energy intensive, said Ahmed Saeed, an assistant professor of computer science at Georgia Tech.
“AI doesn’t sleep,” Saeed said.
Neither do hospital systems, 911 emergency services, banking platforms or the thousands of other daily necessities that require data centers, said Jordan Sadler, senior vice president of public and private investor relations for Digital Realty.
“There’s so many critical things that you don’t want to go down,” he said.
Credit: Courtesy of Digital Realty
Credit: Courtesy of Digital Realty
Some of the largest data centers eyeing Georgia need more than 1,000 megawatts of power, Georgia Power’s “large load” reports show. That’s roughly equal to the output of one of the nuclear reactors at Plant Vogtle near Augusta.
In 2022, before the latest data center surge started, Georgia Power projected its winter peak electricity demand would only grow by about 400 megawatts by 2031. Now, its most recent forecasts show peak demand growing by 8,200 megawatts by then — 20 times earlier projections — and nearly all from data centers.
Meeting that demand, if it comes, will require a massive expansion of Georgia Power’s generation fleet and transmission infrastructure. So far, the utility plans to lean heavily on fossil fuels to supply electrons.
In late July, Georgia Power proposed adding roughly 10,000 megawatts of new capacity in just five years. That would mean boosting the utility’s generation fleet by 42%, an expansion that’s unprecedented in company history.
About 4,000 of those megawatts would come from battery storage, including a small amount of solar. But the bulk of the new-generation muscle would come from burning gas: both units built by the company and power purchased from existing ones.
The utility is also leaving coal plants in Georgia and another in Alabama running for the foreseeable future, backing away from plans to close most of them by 2028.
The data center industry sees the willingness to expand the power grid as Georgia rolling out the red carpet.
“They’re looking to seize the opportunity rather than run from it,” said Chris Gatch, chief revenue officer at Dunwoody-based DC Blox, a data center company.
Over several years, many Georgians have told the PSC they are worried about the effects Georgia Power’s reliance on fossil fuels will have on the climate. Coal is the most “carbon-intensive” fuel, according to the Environmental Protection Agency, but oil and gas also release plenty of planet-warming pollution too.
New gas plants, like the ones Georgia Power is building, could stay in service 40 years or longer.
Credit: Miguel Martinez-Jimenez
Credit: Miguel Martinez-Jimenez
Aaron Mitchell, Georgia Power’s senior vice president for strategic growth, said company investments to build new oil and gas plants — along with adding solar and batteries — reflect an “all-of-the-above approach” needed to build a reliable fleet.
How much Georgia Power’s expansion will ultimately cost is murky, but company filings shed some light.
In its latest annual report, the utility projected $34 billion in capital expenses through 2029 — nearly equal to the cost of the Plant Vogtle expansion. That does not include as much as $14 billion in additional spending the company could incur for other generation and transmission projects, the report says.
Georgia Power isn’t the only Peach State electricity provider bulking up.
Oglethorpe Power, which generates power for 38 Georgia electric membership cooperatives, is spending $2.3 billion to build new gas-burning units at sites near Macon and Columbus.
Credit: Courtesy of Oglethorpe Power
Credit: Courtesy of Oglethorpe Power
GreyStone Power Corp., an EMC serving a data center-heavy corridor of west metro Atlanta, said it has seen demand take off since 2022.
Creighton Batrouney, GreyStone’s executive vice president of power supply, said it has required data centers to pay up front for new substations and other transmission hardware they require.
So far, she said they have not had to raise rates on other customers and have seen benefits, like new substations, paid for entirely by the data centers.
Batrouney said securing huge amounts of electricity and building new infrastructure has been challenging, but added that she thinks “they are helping invest in our generation and grid resiliency.”
Questions of cost
Data centers’ power needs are becoming more intense every year, said Bill Panian, a data center director at Equinix in downtown Atlanta.
“Even though they (computer chips) are getting more efficient, they’re doing more computations. The power density is going up,” he said.
Still, some have questioned whether the electricity surge heading for Georgia will ultimately be as large as some predict.
In hearings on Georgia Power’s long-range energy plans earlier this year, PSC staff questioned whether the company’s forecasts were overly optimistic. The utility said it uses the best modeling available and pointed to the risk of blackouts if it can’t meet demand.
But monopoly utilities like Georgia Power earn profits on their investments in new power plants and transmission lines. Critics say that encourages them to build — whether infrastructure is really needed or not.
“There is data center growth happening,” said Bob Sherrier, an attorney with the Southern Environmental Law Center. “But Georgia Power is incentivized to be optimistic because they make more money when they build more stuff.”
Whether data centers will pay for the historic grid buildout — or if residential customers and other businesses will subsidize it — is unclear.
Diorio from the Data Center Coalition said its members are committed to “paying their full cost of service for electricity.”
At Georgia Power’s urging earlier this year, the PSC approved changes to the utility’s billing rules to allow data centers to be charged for costs tied to serving them. The changes include PSC staff oversight of new company contracts with large-load customers.
Georgia Power and the PSC have pledged that the guardrails will shield other customers from costs. Sherrier said he hopes that’s the case, but added “there are a number of reasons to be skeptical.”
A 2024 audit commissioned by the state of Virginia, home to the world’s largest data center market, found data centers are so far paying their fair share of electricity costs. But, it warned the investments in generation and infrastructure “that would not otherwise be built” are so large that expenses could spread to other customers.
“It will be difficult to supply enough energy to keep pace with growing data center demand, so energy prices are likely to increase for all customers,” the report said.
Credit: Zachary Hansen / Zachary.Hansen@ajc.com
Credit: Zachary Hansen / Zachary.Hansen@ajc.com
As more data centers come online and revenues increase, Georgia Power has said residential customers may actually see their electricity bills fall. Mitchell, the Georgia Power executive, said the company is “committed to keeping the affordability of our product and benefits to our customer front of mind.”
But there are ominous signs from other parts of the U.S. A recent report by The New York Times found in Ohio and other states, where the electricity market is regulated differently from Georgia’s, residential power bills increased after data centers arrived.
Water worries
As data centers pack in more powerful chips, all that computer processing uses more electricity, which releases heat. To keep their hardware cool, most facilities use systems that require water.
In some cases, lots of it.
Katherine Zitsch, water policy consultant at the Metro Atlanta Chamber, said that “when people say, ‘Wow, that uses a lot of energy,’ I say, ‘And water.’”
How much Georgia’s data centers are using is tough to pinpoint.
Local water managers say most are comparable to other large users, like a factory or a hospital, that might use hundreds of thousands of gallons a day. The $17 billion “Project Sail” data center campus proposed in Coweta County indicated in filings with Georgia’s Department of Community Affairs that it could need 9 million gallons a day.
In metro Atlanta, where water supplies are vulnerable to drought, data centers’ consumption has come under the microscope.
Credit: Courtesy DataBank
Credit: Courtesy DataBank
The Atlanta Regional Commission works with 15 metro Atlanta counties to develop a regional water plan every five years. Danny Johnson, managing director of the ARC’s natural resources department, told state legislators at a July committee meeting Atlanta’s water supply is among the smallest of any major U.S. metro area.
“We rely almost entirely on surface water — that’s our rivers and our reservoirs — and we are prone to severe droughts,” Johnson said.
Before Douglas County placed a moratorium on new data center development earlier this year, the county west of downtown Atlanta had emerged as one of the region’s hottest data center destinations. It has five operational data centers, four more in development and at least another four in various proposal stages, Douglas Planning and Zoning Manager Allison Duncan said.
At the same July legislative committee meeting, Shearouse, the Douglasville water system leader, pointed legislators to its partnership with Google on a data center campus as a model for the state.
The facility, which was the first data center to come to the county in 2007, now cools itself with recycled wastewater instead of finished drinking water.
Johnson of the ARC urged committee members to consider whether data centers statewide should be required to use “closed loop” cooling systems that recycle water instead of evaporative ones that send used water into the air.
There are trade-offs to consider there, too. Closed loop systems typically use less water but require more energy.
“The two systems are not separate, energy and water,” said Zitsch with the Metro Atlanta Chamber. “We have to think of them together, especially when it comes to projects like data centers.”
Credit: Courtesy of Digital Realty
Credit: Courtesy of Digital Realty
The real test could come when Atlanta faces its next drought.
The Peach State has experienced shorter dry spells in the last decade, but its last prolonged drought was between 2010 and 2012. Water providers are required to have drought contingency plans, and Johnson recommended utilities have conversations now with data centers to identify “risks and protocols” for an emergency.
But with so many data centers in the planning stages, it’s hard to know how much water demand there will be, and the region’s next comprehensive water plan won’t come out until 2028.
Legislative efforts
There is legislation some believe could help protect Georgians from the onslaught.
New rules approved by the PSC earlier this year ordered Georgia Power to ensure contracts with large-load consumers don’t burden existing customers. But the company has not inked any agreements yet with data centers under the provisions.
Some, like state Sen. Chuck Hufstetler, R-Rome, still think more steps are needed to ensure residential customers don’t wind up paying for infrastructure costs they aren’t responsible for.
Earlier this year, Hufstetler introduced Senate Bill 34, which would have forced Georgia Power to charge data centers for any costs “substantially related to” serving the facilities. The bill, however, stalled after facing opposition from Georgia Power and data center groups.
Mitchell, the Georgia Power executive, said the company believes the PSC rules are “adequate” to protect existing customers from data center costs.
Hufstetler said he isn’t convinced and will push the measure again next year.
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