In Cleveland, the electric utility landscape is undergoing a significant transformation as hyperscale data centers reshape industry practices. For nearly twenty years, utilities had anticipated modest electricity demand growth, gradually upgrading their infrastructure. However, the advent of artificial intelligence (AI) has dramatically altered these expectations.
During Thompson Hine's "Powering the Future: Energy in the AI Age" forum, industry leaders, including those from utilities, grid reliability organizations, and engineering firms, articulated the urgent need for electric companies to rethink their approaches to serving large customers. The sheer scale of energy demand from data centers—often requiring hundreds or even thousands of megawatts at a single site—means that existing frameworks for transmission, substations, transformers, and interconnection studies are being revised.
Brian Thiry, director of strategic engagement and reliability at ReliabilityFirst, emphasized the inevitability of these changes, noting, "The data centers are ubiquitous. They are coming. We’re going to need all the megawatts from all the resources to power the future." His remarks highlighted that AI's challenges are an acceleration of existing pressures on the grid rather than brand-new issues.
Utilities had grown accustomed to planning for stagnant demand, but as Thiry pointed out, forecasts from the PJM Interconnection have sharply risen as electric companies account for new AI facilities, electrification, and evolving manufacturing needs. ReliabilityFirst has already flagged potential resource inadequacies linked to power plant retirements and electrification trends, even prior to the influx of AI-driven projects.
As demand rises, Thiry stated, the focus no longer rests solely on generating electricity. "It’s not just about the generation and the load; it’s about the deliverability and the infrastructure," he explained. This necessitates the development of new transmission lines, substations, transformers, and switching equipment—assets that can take years to design, permit, and build.
This shift is also prompting utilities to adjust their operational strategies. Rachel Lindesmith, director of national accounts at FirstEnergy, advised that developers should initiate discussions with utilities as early as possible in the project timeline. FirstEnergy has implemented a two-stage load study process to help streamline project evaluations and provide developers with preliminary cost and scheduling estimates sooner.
Delays in equipment availability are further complicating situations, with some infrastructure such as transformers requiring extensive lead times of four to five years. FirstEnergy is taking proactive measures, investing in significant transmission projects including a partnership with American Electric Power to construct over 300 miles of a new 765-kV transmission system throughout Ohio.
The discussion around industrial development is shifting as well. Terry Coyne, a commercial real estate broker, remarked that developers’ focus has transitioned from traditional factors like access to highways or acreage to prioritizing electrical capacity, specifically concerning megawatts. Hyperscale operations are now competing with traditional manufacturing and industrial projects for vital energy resources, resulting in demand levels that were once only associated with major industrial users.
Even as alternative energy solutions like behind-the-meter generation and small modular reactors come into play, industry experts caution that these do not wholly resolve reliability issues. The integration of privately developed power sources into the broader grid remains a necessary consideration. Thiry noted that even self-sufficient power plants must be effectively managed alongside existing grid infrastructures to address reliability during disruptions or maintenance activities.
The recent call by the Federal Energy Regulatory Commission for regional transmission organizations to reassess their large-load interconnection protocols underscores the urgency of these developments. While stakeholders support policy changes, they recognize that systemic issues like equipment lead times and the complexities of engineering and permitting processes will continue to challenge utilities as they adapt to an evolving energy landscape.
AI's influence on power demand is evident, yet it is not the sole driver of this shift. Other industries—including manufacturing and defense production—also seek access to abundant electricity, competing for the resources necessary to meet new and rising demand. As the electric utility sector advances, it is clear that enhancing transmission capabilities and revising interconnection strategies will be paramount to accommodate the burgeoning class of high-capacity customers.
