Utilities in Florida and Virginia discuss major deal as AI power use grows

In short: A proposed multi-billion-dollar deal involving utilities in Florida and Virginia is drawing attention because AI data centers are pushing electricity demand up fast.

What's going on

AI data centers, which are large buildings filled with computers that run AI systems, use a lot of electricity. Some facilities can draw around 100 megawatts, which is roughly like powering about 100,000 homes. As more AI services get built, utilities, the companies that supply electricity, are being pushed to add more power plants and upgrade the grid.

Virginia is a clear example of this pressure. The state has roughly 600 to 665 data centers, and several estimates say data centers now use more than a quarter of all electricity in Virginia, with some reports putting it closer to 40% in 2024. Dominion Energy, a major utility in Northern Virginia, has said data centers were already 21% of its electricity sales as of late 2022.

Florida is also becoming more attractive for new data centers, partly because developers can find cheaper land and good connections for shipping and internet cables. A cross-state deal between Florida and Virginia utilities is being discussed as one possible way to secure enough reliable power for future growth, although public details about the exact structure of the deal are limited.

What to watch

Regulators are starting to change how big data centers pay for electricity, to avoid households picking up the tab for new power lines and power plants. In Virginia, Dominion has approval for a new rate class that requires very large users to sign long contracts and pay minimum charges even if they use less power than expected. Watch for whether Florida adopts similar rules, and whether the Florida and Virginia discussions lead to specific commitments that affect electric bills and grid reliability.

Source: NYTimes