[Humorist2290]

Interesting analysis. In it they say

  Worse, the burden [generating energy] increasingly falls on the buyer [data center developers]

I don't believe this is worse, but appropriate. The grid is a shared resource, used by enterprise and individuals. If some class of consumers demand an outsized share of that resource, they should pay an outsized share of its maintenance and development. I don't see that happening.

It's as if trucking companies flooded the highways with so many trucks that people couldn't commute to work anymore.

[ZeroGravitas]

When the first wave of these datacenter stories came out, the utilities complained that they couldn't finance the work because the data centers refused to commit to paying for them over the longer term, leaving other ratepayers on the hook for the investment.

This seems to further confirm that, though now the data centers are being portrayed as the victims in this.

The sentence immediately following your quote:

> securing grid-connected power now often requires developers to post substantial letters of credit, security deposits, or sign take-or-pay commitments to fund the generation built to serve their load.

The question is, if they couldn't commit to paying the utility, how can they finance building their own independant grid equivalent? Did they find some other sucker to take on the risk?

[htrp]

venture startups (nuclear) and alternative energy public equities

[leonidasrup]

In the past major industrial electricity consumption facilities (like aluminum smelters) have been build near big power plants. Or dedicated power plants have been build to power major industrial electricity consumption facilities.

For example:

PS5 Combined Cycle Power Plant for Aluminium Bahrain (ALBA)

https://www.idom.com/en/project/ps5-combined-cycle-power-pla...

India

https://nalcoindia.com/business/operation/captive-power-plan...

Tiwai Point Aluminium Smelter, New Zealand

https://en.wikipedia.org/wiki/Tiwai_Point_Aluminium_Smelter

[vitally3643]

> It's as if trucking companies flooded the highways with so many trucks that people couldn't commute to work anymore.

Funnily, that's precisely what happened to America's rail network. Enterprise demanded unlimited right of way to the point that it's laughable to even consider transit by rail these days.

It's going exactly as well as you'd imagine. I expect our power infrastructure is going to be treated exactly the same as our rail infrastructure: legacy public assets to be exploited indefinitely[0] for free[1] profit, and never invested in until failure becomes an existential threat[2]

[0] until next quarter

[1] losses are the public's problem

[2] unless the government bails you out

[cucumber3732842]

It's not "worse" per-say in that the buyer is crunching the numbers and deciding to go with on-prem generation for a lot of their jiggling electrons.

But holy shit is something broken if that sort of approach is more economically effective (middle of nowhere Alaska not withstanding) than having the people who not only specialize in pipes for jiggling electrons, but have all sorts of preferable treatment from regulators and expertise in financing these sorts of things, just enlarge the size of the pipe to your door.

Furthermore, the grid wants to be as big as it can for basically all the same inflow/outflow smoothy reasons a bank or an insurer wants to be. Something is very, very broken here if big, highly financed corporate interests are saying "no I'm not gonna get all my power from the grid" and the grid is saying "actually this is fine". They should be jumping at the chance to essentially have someone else at least partly subsidize their improvements.

Everyone wants to whine about future volatility, will the data centers be around to pay for what they ordered, etc, etc. But the energy industry has a long, long, long track record of financing this risk away. Oil and related energy infra has been boom and busting for over a century.

30yr ago it would have been unfathomable that anyone without an extremely niche case would go where the energy is rather than just ordering up power from the grid.

[psd1]

Not sure how you calibrate your "niche" scale, but foundries and aluminium smelting plants have commonly been sited near generators in Britain. I suppose that transmission losses matter at the GW scale; and also that a national grid is a complex system, with phase slump being a cause of failure even with sufficient generation capacity.

Every DC I've visited - probably ten - has on-site generators, for redundancy. To a certain type of mind, that's capital going to waste. I can imagine a bean-counter desire to sweat that plant.

I agree that today's economics is very broken, but co-siting generation and consumption is probably not a symptom.

Aside: Language is whatever people use, but, "per se" is Latin for "in itself". "Per-say" is an eggcorn.

[cucumber3732842]

>, but foundries and aluminium smelting plants have commonly been sited near generators in Britain.

IDK about Britain, especially historically when you would have been building aluminum smelters. It's not normal in the US more or less since the advent of the grid. I'm sure people will be along shortly to construe exceptions or special cases where the fossil fuels were extra cheap as the norm or heat was what they also needed and it was cheaper to capture that locally and make some electricity too.

>Every DC I've visited - probably ten - has on-site generators, for redundancy. To a certain type of mind, that's capital going to waste. I can imagine a bean-counter desire to sweat that plant.

But they don't use those for any semblance of "normal" load. Those are strictly for redundancy not "ah it's 3pm, power's getting expensive better fire up the genset for 4hr". At least that's normally how it is. It's not normal for it to be possible to out compete the utility even after fixed costs are amortized in. Bigger generation is more efficient, if you're buying fossil fuels then buying them in bulk is more efficient. Etc. etc. It should be cheaper to have the people who benefit from all that string you a wire.

[leonidasrup]

In most places aluminum smelters have been located near power plants, because aluminum smelters have large electricity demand and transporting large amounts of electricity over large distances is expensive (high capacity power lines are expensive).

Electricity costs are between 40% - 50% of costs of the finished aluminum.

Also, reliability.

"Due to the nature of the process, power outages have the potential to cause damage to production cells as the molten liquids could solidify in absence of adequate current. For this reason, production facilities need to be near secure and reliable sources of energy."

https://arcticecon.wordpress.com/2012/02/15/aluminium-smelti...

[cucumber3732842]

"near" vs "next door or closer".

Like in all these historical cases there's been some sort of high voltage transmission in between. Sure, not a hundred mile line through god knows how many jurisdictions, but still plenty, a far cry from the "this won't pencil out if we have go farther than across the street" that we're currently seeing.

Basically what I'm saying is that if datacenters with the closest thing you'll ever see to infinite piles of cash can't expand the grid then we're in for a very rough time.

[piva00]

> Basically what I'm saying is that if datacenters with the closest thing you'll ever see to infinite piles of cash can't expand the grid then we're in for a very rough time.

Isn't the problem that the grid operators/generators have been asking for them to commit part of this huge pile of cash before they start the expensive buildout process but the DCs are refusing to do so?

I don't think it says anything about having a rough time, the grid would expand if those requesting major expansions would commit paying for them. Instead the grid is being told "we need it, build it, and we will pay after" which for the kind of massive investment necessary to push extra dozens of GW is absurdly risky. If the grid starts major expansion and AI investments crumbles in 3-5 years then it's both a waste of resources while also requiring grid operators to charge more the current consumers to bridge the gap left by the AI DCs.

The only thing I can see showing a very rough time is the entitlement of these companies, just because they are surfing a humongous phase of investments they feel they don't need to play by the rules that always existed: if you need something massive you gotta pay for it.

[bigbadfeline]

> a far cry from the "this won't pencil out if we have go farther than across the street" that we're currently seeing.

I'm not sure what crying has to do with it but the losses across two streets are double those "across the street", across 4 streets - 4x loss, etc.

Public utilities minimize losses over a wider area with many customers, connecting a GW datacenter to the public grid isn't as simple or as safe as connecting another house, the best solution here is to keep large consumers separate to avoid grid instabilities.

> Basically what I'm saying is that if datacenters with the closest thing you'll ever see to infinite piles of cash can't expand the grid then we're in for a very rough time.

It's not true that they "can't expand the grid", they don't want to. They were eager to leach on the public grid but when asked to pay their fair share to be properly integrated by the public utilities, they got worried that some minuscule share of their "infinite piles of cash" may benefit the public - nope, you can't have that under any circumstances.

[parineum]

> The grid is a shared resource, used by enterprise and individuals. If some class of consumers demand an outsized share of that resource, they should pay an outsized share of its maintenance and development. I don't see that happening.

That makes sense up until you realize that the data centers aren't just burning watts for fun. They're providing a service that is in extremely high demand to a very high amount of those other electricity customers.

> It's as if trucking companies flooded the highways with so many trucks that people couldn't commute to work anymore.

And those trucks are delivering products to the stores those commuters shop at.

[usrnm]

And we have a perfect instrument to express this relationship: money. If the service is really important to people they will pay money for it, and the companies can pay some of that money to utility providers. The economy works as intended, everyone is happy. Absolutely no need to invent subsidies or move the burden onto consumers

[polski-g]

The problem is that the datacenters need grid investments. And if the utility makes those debt-backed investments but then the DC goes bankrupt, households are on the hook for the debt servicing.

Utilities requiring ten year of prepayment from the DCs makes sense.