From the oil rigs of the Permian Basin to the wind turbines whirring over the Plains, West Texas has long been a magnet for companies seeking energy fortunes.
Now, those barren ranchlands offer a new money-making opportunity: data centers.
Lancium, an energy and data center management company setting up shop in Fort Stockton and Abilene, is one of several companies across the country betting that building data centers near manufacturing sites will allow them to tap into underutilized clean energy.
“It’s a land grab,” said Lancium chairman Ali Fenn.
In the past, companies built data centers close to Internet users to better serve consumer requests, such as streaming a show on Netflix or playing a video game hosted in the cloud. But the development of artificial intelligence requires massive data centers to train the evolving models of large languages, making proximity to users less necessary.
But as more of these sites start popping up in the United States, there are new questions about whether they can keep up with demand while still operating sustainably. The carbon footprint from manufacturing the hubs and racks of expensive computer equipment is significant in itself, and their energy needs have grown significantly.
Just a decade ago, data centers were drawing 10 megawatts of power, but 100 megawatts are common today. The Uptime Institute, an industry consulting group, has identified 10 super-sized cloud computing campuses across North America with an average size of 621 megawatts.
This increase in electricity demand comes as manufacturing in the United States is at its highest in half a century and the power grid is becoming increasingly strained.
The Uptime Institute predicted in a recent report that the industry’s myriad net zero goals, which are self-imposed benchmarks, would be much harder to achieve in the face of this demand, and that backsliding could become common.
“It’s not just about the data centers,” said Mark Dyson, chief executive of RMI, a non-profit organization focused on sustainability. “Data centers are a practice round for a much larger wave of load growth that we are already seeing and are going to continue to see in this country coming from the electrification of industry, vehicles and buildings.”
The data center industry has embraced more sustainable solutions in recent years, becoming a major investor in renewable energy at the corporate level. Locations leasing wind and solar capacity increased 50% year-over-year since early 2023, to more than 40 gigawatts, capacity that continues to grow. However, demand exceeds these investments. And the need for more processing power is to back up the interface queue and create interrupt solutions.
Dynamic data centers at full capacity further complicate the balance. The data centers in the construction pipeline, when completed, will use as much power annually as the San Francisco metro area, according to a report released Wednesday by real estate services firm JLL. Most sites coming online this year are already leased. In the street markets, a significant space will not open for at least two years.
“You have to get as many gigawatts live as possible, as fast as you can,” said Lancium’s Ms. Fenn. “People will mix it up any way they can.”
This quickly expanded growth beyond established tier one and tier two markets such as Northern Virginia, Dallas and Silicon Valley.
Competition is growing in parts of the country that offer cheap land and available power. Amazon, for example, announced last month that it was planning a $10 billion project in Mississippi, the state’s largest economic development project, that includes data centers and solar manufacturing sites.
“Anyone with a significant power source has now become a new data center market,” said Jim Kerrigan, director of North American Data Centers, an industry consultancy.
AI is only a small percentage of the global data center footprint. The Uptime Institute predicts that AI will skyrocket to 10% of the industry’s global energy use by 2025, up from 2% today.
“They’ve been built at a breakneck pace with so many other kinds of drivers in demand,” said Andy Lawrence, executive director of research at the institute. “AI is kind of like foam on top.”
Last year, data center construction grew by 25%, according to real estate firm CBRE. And Nvidia, which supplies most of the high-end chips that power that technology, last week reported a record gain in data center sales, with 2023 revenue to hit $47.5 billion, up 217 percent from the previous year.
The nation’s energy grids can’t handle that kind of demand, said Christopher Wellise, vice president of sustainability at Equinix, a global data center operator. “Technology is moving faster than our infrastructure has evolved,” he said.
Equinix, which operates 260 data centers worldwide, installed fuel cells from Bloom Energy to help provide backup power to many of its data centers. The company is also reducing emissions with offsets, such as through power purchase agreements, and has extracted 5 percent more efficiency from its operations in the past year, Mr. Wellise said. Design firms such as Gensler have experimented with new designs that feature massive timber to limit the embodied carbon of data centers.
And AI itself can help: At a data center in Frankfurt, Equinix used the technology to moderate cooling loads and adjust energy use in response to changing weather conditions, making a data center 9 percent more efficient.
Niklas Sundberg, sustainable IT expert and chief digital officer at Kuehne + Nagel, a transport and logistics company in Sweden, said the industry should focus on investing in renewable energy generation capacity.
Some locations have attempted to install on-site gas-fired power plants to fill grid shortfalls. It may be cleaner than existing power, but it adds to the industry’s significant carbon footprint.
And lawmakers have proposed more transparency and action. The Senate introduced a proposal in early February to assess the environmental impact of artificial intelligence. Lawmakers in Northern Virginia, which is known as Data Center Alley, have pushed to impose sustainability goals for data centers.
Virginia state senator Suhas Subramanyam has proposed a number of rules, including one that would require data centers to get at least 90 percent of their power from renewable sources to qualify for subsidies. “I don’t want to put my kids in a situation where, in 20 years, they have to pay some of the bills for things that we thought were a good idea and turned out not to be,” he said.
