Data centers need more than just large-scale power
Why it matters
- Growing power demand puts pressure on grid capacity
- Fluctuating computing loads can threaten power stability
- Early planning reduces technical and financial risk
For data center developers, the most critical and constraining challenge faced on any project is speed to power. Grid connectivity, on-site power generation, and delivery infrastructure growth in the U.S. data center market is being driven by hyperscale cloud services providers, artificial intelligence (AI) workloads, and digital transformation.
More than $2.7 trillion in data center capital investment could be deployed in the United States through 2030, representing over 40% of an estimated $6.7 trillion in global data center infrastructure spending.
The U.S. power grid and utilities will be challenged to meet the growing power demand. Some projections indicate data centers will account for approximately 50% of total U.S. electricity-demand growth through 2030, while other current analyses indicate an even larger contribution under higher-growth scenarios.
These power-hungry developments consume roughly 4%–5% of U.S. electricity, and that share could rise to about 11.8% by 2030 with planned local concentrations that range from tens of megawatts up to multi-gigawatts.
For perspective, power demand has remained relatively unchanged for the past decade; only the generation mix is different. It is believed that data centers will create a paradigm shift in how generation is developed, forcing hybridization of technologies to meet the rapid increase in demand.
Managing large-scale power
The need for large-scale power is only part of the story. For utilities and data center developers, the management of this scale of energy is where some of the most complex challenges lie.
Mitigating potential impacts to the electric grid is not necessarily compatible with delivering large amounts of energy to sites that are sized in acres that contain sensitive technology requiring high quality and reliable power.
Imagine power needs that are sized on the order of a large industrial load—think as large a standard U.S. city—placed at a single transmission point of interconnection and contained within less than half a square mile. The engineering challenges are not just formidable, they are daunting.
The design and implementation of effective electrical protection and control systems are critical when response times are truncated and physics become improbable. Energy resilience is essential to protect sensitive computing operations both technically and economically when power must always be available.
Equally important are the risks these new data center loads can pose to the security of the larger electrical grid. AI-related computing loads can be notoriously variable. AI training workloads can drive synchronized power swings of approximately 70% at the rack level within milliseconds, while facility-scale measurements have documented tens-of-megawatts of demand change within fractions of a second, many times per minute.
Without proper planning and design, these variations can pose unacceptable risks to the stability of the transmission grid and any on-site generation resources.
Additionally, the contractual risks to data center operators can be significant when load stability violates agreed limits.
Alternative energy resources
Increasing numbers of data center developers are incorporating a complex, hybridized mix of energy resources to support their operations with power and stability enhancement.
One example of these resources is battery energy storage, which brings into focus a variety of solution options with each carrying different costs, performances, and risk profiles. To add to the complexity, data center developers are actively deploying on-site generation scaled far beyond traditional diesel backup generation for the occasional critical building.
One option, large-scale gas-turbine generation, adds gas utility interconnections, investment analysis for technologies, various permitting requirements, and operational concerns to the challenges of incorporating these generation assets into a complex power environment. Sourcing natural gas has become another consequent issue for many data center developers, adding the capital and operating costs of supply pipelines to the investment stack.
Interwoven into the energy solutions context are communications capacity, design, and performance specific to the implementation of the site energy management platform.
Significant investment requires informed decisions
The scale of investment involved in the development of any data center facility is substantial.
Depending upon size, location, and intended use, data center construction costs can be estimated in the range of $10–$14 million per MW, with AI-optimized facilities adding up to $25 million per MW. The largest facilities easily exceed $1 billion in total cost. All this to say, in addition to the technical complexity, comes substantial financial risk.
With speed to market being paramount in this new data center "gold rush" era, the consequences of hurried, poorly informed decisions can have cascading impacts on construction, operations, and eventual contractual performance and returns on investment. The confluence of market urgency, technical complexity, investment scale, and risk requires solutions and expertise that test even the heartiest of investors and developers. But the rewards of a well-executed project have the potential to be unparalleled.
Innovative solutions insights
Tackling these daunting challenges requires a mix of expertise, experience, innovative thinking, and rock-solid decision support. Protection and control engineering integrated with a responsive, effective control system, and communications infrastructure are needed to overcome the scale of power, performance requirements, and risk for fault protection. Innovative solution insights must support the deployment of immediate, uninterruptible power configured to serve use cases that require guarding the grid against sudden load and frequency drops while also providing resilience to the data center when power reliability is a concern.
Site and power system master planning, design, and construction must be coordinated to deliver cost-effective results. Operational efficiency and safety standards are critical once the data center site is operational, particularly when customer-owned high-, medium-, and low-voltage assets are activated.
Tying it all together, the technical insights of a broad industry perspective honed with years of investment-grade analysis must be relied upon to ensure smart, efficient decision-making when millions of dollars are at stake and the consequence of a misstep manifests not only in terms of dollars and cents, but in safe operation and liability mitigation.
The right mix of bold expertise and prudent thinking is essential in a data center development team.
How does Leidos support data center power planning and development?
Leidos brings utility engineering, power systems expertise and investment analysis to data center power planning and development.
Our work with electric utilities and regulatory agencies across the U.S. spans planning, grid interconnection and engineering. We are engaged in advanced site-level power systems research and demonstration projects for customers in the Federal, local and commercial spheres. Most importantly, we are partnered to deliver results addressing the exact issues described for the largest data center projects underway today.
Our engineers and consultants support our data center clients in solving the most impactful challenges data center projects face. We help these clients chart the road ahead by identifying risks and advising them on decisions from the grid to the gate of the data. Early engagement and expert partnership are vital to project success.
Key takeaways
- Data center development requires coordinated planning for power availability, load stability, resilience, and financial risk
- On-site generation and battery storage introduce additional engineering, infrastructure, and operational considerations
- Leidos brings utility engineering, power systems expertise, and investment analysis to data center development
