Episode 223 - Are data centers really that bad? with Julia Cartwright

Yeah, thanks, Julia.

So you mentioned in the Brattle study that, yeah, it's not retail electricity that's being impacted or that drives or that's impacted by data centers.

But you mentioned that, yeah, distribution and transmission costs, which is a big part of the bill for most customers.

And like you said, on the East Coast, a lot of the grids are old and need upgrades before they could accommodate new load, new large load, especially, which is, I think, where a big fear of the data centers would come in because utilities would be forced to upgrade transmission and distribution equipment.

And if the data centers come in and then they have to, you know, The utilities have to build more transmission, but then the data center, you know, doesn't last or doesn't come to fruition because there's so much, so many data centers in the queue and people fear that, okay, we're going to build up all of this electric infrastructure and then the data center is going to go.

So I think,

and I know

there's been a lot of pledges from some of the companies that to say, oh, we'll pay upfront for any of the upgrades.

There's spotty legislation and regulation coming through the states, but it seems like probably we need something nationwide or some more strict requirements other than pledges from companies saying that they'll pay for upgrades upfront.

What do you know about

that? Just to build off what Dev's saying there, have you paid any attention to the Ratepayer Protection Act that's currently going through Congress?

A little bit.

I haven't read the fine print of it, just kind of high level.

But I actually would very much caution, especially federal intervention on this topic.

And why is that? It's because this has to do...

And actually, the first study that I mentioned, the Brattle study, actually found that one of the big reasons that...

And even in some states, the more data centers you have, actually the cost went down is because if you look at the price per watt, if you will, because there were so many data centers coming in, they were actually contributing to the fixed cost of the infrastructure and grid and bringing down that marginal cost.

of production.

So I actually think this is so important for the states and local municipalities to battle this out.

And that's exactly what they're doing.

So we see Florida looking at sort of a pay your own way because exactly what you said, this is a huge problem, right? Someone coming in and just putting giant stress on the system.

And that's why places have, or a lot of new development has what's called an impact fee.

So oftentimes when you're building, for example, an apartment complex, they'll say, hey, you're going to have strain on electricity.

You're going to have strain on water.

We're going to put this fee per unit or whatnot to then service this infrastructure, which there's, of course, debates about this.

Yeah, thanks, Julia.

So you mentioned in the Brattle study that, yeah, it's not retail electricity that's being impacted or that drives or that's impacted by data centers.

But you mentioned that, yeah, distribution and transmission costs, which is a big part of the bill for most customers.

And like you said, on the East Coast, a lot of the grids are old and need upgrades before they could accommodate new load, new large load, especially, which is, I think, where a big fear of the data centers would come in because utilities would be forced to upgrade transmission and distribution equipment.

And if the data centers come in and then they have to, you know, The utilities have to build more transmission, but then the data center, you know, doesn't last or doesn't come to fruition because there's so much, so many data centers in the queue and people fear that, okay, we're going to build up all of this electric infrastructure and then the data center is going to go.

So I think,

and I know

there's been a lot of pledges from some of the companies that to say, oh, we'll pay upfront for any of the upgrades.

There's spotty legislation and regulation coming through the states, but it seems like probably we need something nationwide or some more strict requirements other than pledges from companies saying that they'll pay for upgrades upfront.

What do you know about

that? Just to build off what Dev's saying there, have you paid any attention to the Ratepayer Protection Act that's currently going through Congress?

A little bit.

I haven't read the fine print of it, just kind of high level.

But I actually would very much caution, especially federal intervention on this topic.

And why is that? It's because this has to do...

And actually, the first study that I mentioned, the Brattle study, actually found that one of the big reasons that...

And even in some states, the more data centers you have, actually the cost went down is because if you look at the price per watt, if you will, because there were so many data centers coming in, they were actually contributing to the fixed cost of the infrastructure and grid and bringing down that marginal cost.

of production.

So I actually think this is so important for the states and local municipalities to battle this out.

And that's exactly what they're doing.

So we see Florida looking at sort of a pay your own way because exactly what you said, this is a huge problem, right? Someone coming in and just putting giant stress on the system.

And that's why places have, or a lot of new development has what's called an impact fee.

So oftentimes when you're building, for example, an apartment complex, they'll say, hey, you're going to have strain on electricity.

You're going to have strain on water.

We're going to put this fee per unit or whatnot to then service this infrastructure, which there's, of course, debates about this.