Louisiana’s blossoming AI data center market has been the cause of much excitement and much consternation in recent months, as the thrill of multibillion-dollar project announcements has given way to worries that the state’s already strained energy infrastructure won’t be able to handle the load.
As Business Report writes in its latest issue, industry experts agree that unprecedented increases in energy use are on the way, but are skeptical that the fledgling market will unavoidably strain the electrical grid or lead to rate increases for other payers. It all hinges upon the ability of energy providers, data center owners and regulators to strike the perfect balance between supply and demand when the time comes.
“It’s a Goldilocks scenario,” says Greg Upton, executive director of the LSU Center for Energy Studies and interim director of the LSU Energy Institute. “It’s about getting it just right. It’s about investing in the right amount of capital and getting the timing of it right. That will require the regulator and the utility to sit down, think about this and make good choices.
“If the utility builds new facilities and they end up being underutilized, in theory it could lead to an increase in rates because you’ve invested too much capital,” he adds, “and that will be passed on to the other ratepayers.”
The same problem could result if they underinvest in new facilities, since the energy provider will then need to use its existing energy infrastructure to supply the demand.
“But on the flip side, if you build out the generation and it’s more efficient and modern, and your utilization is in sync with the supply of electricity, it could have no impact at all or even lead to a reduction in rates,” Upton says. “They’ll need to get the balance right.”
Read the full story, and send comments to editor@businessreport.com.
