Data Centers
They need us more than we need them
The below is a comment I am submitting to the Xcel JTS proceeding.
I’m new to energy. But Big Tech, that was my world the last 45 years. I worked for Microsoft for 3½ years and worked for software startups that were interconnected to big tech the rest. My company Windward was in very close coopetition1 with our product.
Big Tech views A.I. as key to their future. If they overspend on A.I., they can afford the loss. But if they underspend, and fall behind in A.I., that will make their company an also-ran.
Of course the Big Tech companies will take the best deal. They’re not stupid. But what they need is power and they need it yesterday.2 And while they prefer to appear green, they’ll take a coal plant if that’s their only option. Look at what Musk did in Memphis - he built and fired up a bunch of gas turbines, because that was the fastest way to get power.
If you want to get data centers, and profit off their use, you need to approach it as follows:
Offer them reliable3 24/7 power. That means CCGT today and nuclear in the future. Yes they’ll put solar on the roof of their buildings and put out press releases about that. But what they need is 24/7 power.
Require that they commit to purchase the power you build for them for 20 years. They will drop you without a second thought if it’s in their interests. Don’t leave the rate payers holding the bag.
Make a good profit on them. They’re desperate for power. Offer that and there’s no need to provide any other incentives.
Place this all in a location that benefits Colorado. One possibility is near Sterling4 where it will mean a lot of good jobs that match the workforce there. And if there’s one thing the Sterling area has, it’s lots of cheap land.
Finally, don’t assume you will get them until you have their signatures. There are certainly other locations that have realized dependable power is the key and are offering something similar. And it may take time to get 20 gas turbines delivered.
In the context of the JTS it’s fine to include a proposal for bringing large data centers to Colorado. But do not include any assumed build out or profits from those data centers until you have their signature.
Keep in mind getting a number of these data centers is a nice win where they are located, but are pretty much a wash for the rest of the state.
And they are a giant negative if we don’t build additional generation for them. Reliable consistent 24/7 power generation.
Cooperation/Competition
Reliable means we need to prove we have sufficient grid inertia.
Pueblo could also be a good location - and that would be a Just Transition.