As Mayland jurisdictions work to both attract data center developments and address community concerns, one challenge looms over the entire industry – meeting vastly higher energy needs. Industry watchers say governments and businesses need to embrace new ways of meeting growing energy needs or risk stifling economic development in Maryland.
“Right now, electricity use by data centers comprises about five percent of electricity use in the PJM territory so we’re not in such a bad spot,” said Christine Ciavardini Devine, Client Relationship Manager at MD Energy Advisors. “But when you look at the growth anticipated in the next several years, we are in a predicament with supply.”
PJM predicts its total demand will rise 40 percent by 2040 due to data centers, building electrification, electric vehicles and other factors. By 2040, electricity use by data centers is projected to comprise 25 percent of that larger, total load. Although the retirement of some power generators has been postponed, generation is not currently on track to fully meet that rising demand.
“We’re getting into a big imbalance because generation assets are not going to meet the amount of demand PJM is anticipating,” Ciavardini Devine said. “If we don’t add generation assets, we could see electricity reliability compromised in our homes and businesses as early as 2030.”
That situation presents an obvious problem but also some opportunities.
“Data centers will locate where the energy is, whether that’s beside a transmission line or on top of a natural gas pipeline,” she said. “Some data centers are not even planning to rely on the grid. They are willing to isolate themselves from the grid and do on-site generation, and they have the funds to do that.”
Data centers locate where connectivity and customers are located, including Maryland-based government customers engaged in cyber security and national defense. And those data center developments typically fund needed infrastructure.
Some data center companies, Ciavardini Devine added, are also in a great hurry to develop.
“These data centers are time-critical, meaning the first one that comes to market is going to make the biggest profit,” Ciavardini Devine said.
Stephen Powell, Chair of the Prince George’s County Leadership Committee of the NAIOIP DC-Maryland Chapter, says existing power infrastructure in Maryland creates some opportunities to serve the needs of data center developers.
“I think there are great opportunities in Prince George’s County because you have power infrastructure and you have industrial sites available,” Powell said. “For example, you have some major power lines running through Laurel that are near industrial sites.”
Those conditions could make Central Maryland more attractive to the data center industry, he said. “If a developer has to go out to Prince William County, out to Fredericksburg, it will cost them a lot more to bring power to the site. Whereas in Prince George’s County, you have established infrastructure so it could be cheaper to get power to the site.”
Kelly Schulz, Chief Executive Officer of the Maryland Tech Council, says Maryland needs to prioritize addressing energy availability, not just to grow the data center sector but to support economic development in the state generally.
“Half of my industry partners in the Maryland Tech Council are life sciences and biotech manufacturers,” Schulz said. “They need a lot of energy and they are not going to come here unless the energy is here. So, energy is not a data center problem. It’s an economic development problem.”
Featured in this article: MD Energy Advisors, NAIOP DC-MD Chapter, Maryland Tech Council