Since the 1930s, America’s rural electric co-ops have provided reliable and affordable power to places that investor owned utilities would never serve. The co-op model of member ownership has served rural Americans very well. But now, the rise of AI and its driving need for more data center capacity is turning the electricity supply situation upside down across the U.S. This issue has been mostly relegated to cities so far but now as they run out of power, a move to rural areas by the tech industry is afoot.
Now as the tech industry’s data center developers go into overdrive to secure more processing capacity, electric co-ops need to be more vigilant that ever about getting lured into high risk electric supply contracts with these entities. Supplying data centers, which can consume as much electricity and water as a medium sized city, can demand massive expansion of a utility’s generation and transmission resources. This could amount to hundreds of millions of dollars of new capital expenditures by the co-op.
And, to complicate matters, many financial experts are vocally urging caution as the AI/Data Center business has all the earmarks of a massive bubble, which if it pops, could make the Dot Com meltdown of the early 2000s look like a minor blip. Such an event could leave a co-op holding the proverbial financial bag as the data center clients fade away.
John Gavan
Paonia
