Ohio power plants want special tariffs on datacenters to protect regional grid

Server operators may need to pay up front, even for electricity they don't need yet

The Ohio branch of American Electric Power (AEP) wants to slap new tariffs on the increasing number of power-hungry datacenters in the Buckeye State.

AEP, one of America's largest providers of electricity, requested approval for its latest pricing plans in a May 13 filing [PDF] to the Public Utilities Commission of Ohio. That document outlines key problems datacenters have caused for the state's regional grid. As for who should be put on these plans, the power biz has in mind larger datacenters that consume 25 MW at a single location, and mobile datacenters (eg, cryptocurrency miners) that use 1 MW.

Much of the motivation here is that AEP Ohio sees an impending power crisis looming. The electricity generator put a moratorium on new service requests from datacenters in March 2023, in order to explore what kind of impact further datacenter expansion would have in central Ohio, and is now basically suggesting bit barns pay up front for power they might not even use.

"Demand for computing power from data centers, which require enormous amounts of electricity, is being fueled by artificial intelligence and other new technologies," AEP Ohio president Marc Reitter said in a canned statement. "We need accurate plans and solid commitments from large data center customers so the right facilities are built at the right time."

Part of the problem is that AEP Ohio's queue of datacenter and cryptomining customers is now 50 companies long, and collectively they're asking for over 30,000 megawatts of supply in the future, we're told.

"Building electrical infrastructure required to serve this kind of load is not an immediate solution and can take years for planning, regulatory approvals, material acquisition, and construction," says AEP Ohio.

Overall, the power used by datacenters is expected to continue ratcheting up, at least till 2030. The service agreements AEP Ohio has signed with datacenters will double the load in Central Ohio, and for that matter, the power company's top five customers revolve around datacenter operations.

Finding the cash needed to expand the grid will be crucial for delivering the datacenters' required 30 GW supply and to make sure the grid is redundant enough, though AEP Ohio says the money just isn't there. Current forecasts to electricity wholesaler PJM Interconnection don't factor in all that extra demand, making current spending "a fraction of what investments would be required."

Tariffs and minimum payments necessary to keep datacenters in check

AEP Ohio argues datacenters need to pay into the regional power grid more, and says it can accomplish this by hitting them with new tariffs that set new rates and force the datacenters to pay for at least 90 percent of their contracted power draw regardless of their actual consumption.

Paying a minimum 90 percent of contracted power draw would encourage datacenters to only ask for what they actually require. Extra costs may also discourage datacenter operators from constructing and running facilities at their current rate in the state.

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As for customers that try to get out of their contracts or go bankrupt, AEP Ohio also suggests forcing datacenters to put up collateral just in case.

All that extra cash will hopefully be spent on expanding the power grid and strengthening it for the future. That would be funded by the customers that are pushing consumption up, rather than relying on higher rates overall that would disproportionately impact residents and other businesses.

The fear AEP Ohio has over datacenters is certainly not unique. Arm CEO Rene Haas warned last month that datacenters could ramp up to a quarter of US power consumption by 2030. That said, it's not clear how things will actually shake out, as some estimates aren't quite as extreme; however, extra power will undoubtedly be necessary to feed the further expansion of datacenters in the coming years. ®

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