Envisioning a High Load Growth Future: Data Centers

Abstract

The electric industry has maintained relatively stable levels of electricity growth over the past few decades. Some utilities are now forecasting increasingly large spikes in electricity demand, due in particular to AI and data centers. Connexus Energy sought a partnership with the University of Minnesota to better understand the impact data center load could have on the system if this potential is realized. This paper utilizes a combination of interviews with energy experts and quantitative and qualitative analysis to help Connexus understand the technical and policy landscape surrounding data center development in Minnesota. This report identifies opportunities and challenges associated with data center-driven load growth and makes recommendations on how Connexus can realize these opportunities and address challenges. We recommend that Connexus (1) include multiple risk mitigation provisions in large load tariffs or contracts, and price these contracts to include both embedded and incremental costs, (2) utilize green tariffs for renewable energy and a clean transition tariff for distributed energy resources or utility-scale long-duration energy storage, (3) create demand response programs for new large load customers, (4) engage with state and regional organizations to develop solutions to potential market impacts and stranded transmission assets.