Data centre 'demand response' could save US grid US$150 billion, study finds
Technology companies and utilities are exploring ways to make data centres more flexible in electricity consumption, a strategy that could save between US$40 billion and US$150 billion in capital investments over the next decade. The approach, known as demand response, involves temporarily reducing
Technology companies and utilities are increasingly exploring ways to make power-hungry data centres more flexible in when and how they consume electricity, helping ease the strain on US power grids as AI-driven demand surges, according to a report by CNA.
The strategy, called "demand response", involves data centres temporarily reducing or shifting electricity use during periods of peak demand or grid stress. It is gaining traction as a way to reduce the need for costly grid upgrades and new power generation. A study by Duke University's Nicholas Institute estimated that greater flexibility from data centres could save between US$40 billion and US$150 billion in capital investments over the next decade.
US data centre electricity use could rise from about 177 to 192 terawatt-hours in 2024 to between 383 and 793 TWh by 2030, according to the Electric Power Research Institute (EPRI). Data centres surveyed by EPRI reported peak power reduction potential of 10 per cent to 30 per cent, depending on facility type, with some hyperscalers going even higher, said Arin Kaye, EPRI technical leader.
So far, the demand response strategy for data centres has mostly been deployed through pilot projects or one-off agreements. OpenAI, for example, recently agreed to cut the electricity it draws from the grid by up to 1 gigawatt from a planned 3.2-gigawatt facility in Georgia during periods of grid stress. Last month, Alphabet's Google, NVIDIA and Emerald AI launched an initiative called the AI Energy Management Alliance, aimed at advancing the deployment of flexible data centres.
Federal regulators in June ordered grid operators to consider new rules for connecting large power users to the grid, including new pathways for facilities offering this flexibility to connect faster. "Demand response can materially soften peak impacts, but scaling curtailment agreements across hundreds of new facilities will demand significant capital expenditure and coordinated policy frameworks," said Alexander Kheder, an analyst with BMI, a unit of Fitch Solutions.
Experts say scaling up the strategy will require changes on both sides. Data centres need to figure out how to adjust power consumption without disrupting customers, while utilities and grid operators need to develop tariffs, market incentives and faster interconnection pathways that reward that flexibility.
