S1 Ep 7: How are Hyperscalers and Gas Markets Rewiring the Grid: Bring Your Own Power

So in that context, I just wanted to say a couple of things.

That has been a lot of discussion.

I think there has been a lot of discussion that data centers, there is cost shifting happening, data center load growth is responsible for residential rate price increases.

I'm not sure that as of today, I'm not sure if that is quite true.

there was a study that was released by one of the top economics advisory firms.

But even before that, the study that I did, and I'll be happy to share that with you last month, and which we presented in the last podcast, there is no evidence as of now to suggest that data center load growth is leading to residential electricity prices.

Rather, in a way, And both my study and also the study by the economics advisory firm, what the conclusion is that data center actually lead to a decline in residential.

Let me rephrase.

They have led to a decline in residential electricity prices.

They're not by much, maybe, you know, 0.05, 0.10 cents, but they have.

Now this, I think, I mean, if you ask me why this is happening, it's because of the rate dilution effect, right? So, you know, obviously that's a lag when it comes to increase in transmission capacity to keep with increase in the load growth.

And so as a result, your KWH, while your KWH is increasing, your cost in the short term is nearly the same.

So that is basically the rate dilution effect that we are seeing.

And the reason why I'm mentioning this is we have to draw a line.

We have to be cautious that just because data centers have not led to a rate increase until now does not mean that they will not in the future.

I was at the PGM briefing a couple of, I think about a month ago.

And this brings me to another point.

They said the reserve capacity margin are at an incredibly amount that is very, very low.

Historically, it has not been that low.

But data center load growth is the reason, but it's just one of the reasons.

It's not the reason.

They said Along with data center load growth, you also have returning of onshoring, you have the blockchain volatility, you have the electrification that is still going on, not just in the transportation sector, but even when it comes to commercial and industrial buildings, you have electrification going on.

All that is contributing to declining reserve margins as well.

But just that, and I'm taking a nuanced picture, but just that data center seems to be the latest toy in the town, they are also becoming the latest whipping boy.

But going forward, I think we can't extrapolate and say that this will continue as usual and data center load growth can continue to happen, but there'll be no impact on residential price increases.