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The colossal winter storm that swept across 34 states left hundreds of thousands of people without electricity. Bitterly cold temperatures lingering after Winter Storm Fern are still testing power grids, already under stress from a rush of new AI data centers.
“It’s certainly causing more pricing volatility,” says Nikhil Kumar, program director at energy consulting firm GridLab.
“It’s certainly causing more pricing volatility”
Kumar is quick to add that it’s still too early to say exactly what impact data centers have had on power grids during this week’s cold snap, and that the effects can vary from place to place. But this week’s stress test will be important to watch amid the challenges power grids face ahead as the US copes with a shifting energy landscape and a changing climate.
In Virginia, wholesale electricity prices climbed above $1,800 on Sunday compared to around $200 the day prior, CNBC reports. Utility Dominion Energy, the biggest energy provider, didn’t immediately respond to questions from The Verge about factors influencing rising wholesale costs, and how much that would affect residential customers’ bills. The company announced on Monday that it had restored power to 85 percent of 48,000 customers impacted by the storm in Virginia.
Keep in mind that many different issues drive up energy costs. Electricity demand is rising more steeply than it has in more than a decade because of AI data centers, as well as domestic manufacturing and the electrification of homes and buildings. Utilities are also having to spend a lot of money upgrading old infrastructure, as well as repairing damage from intensifying climate-related disasters like storms that have contributed to longer power outages in the US.
With electricity grids nearing a century old and a growing need to expand transmission lines to connect new power sources and customers, “we’re working with our grandfather’s Buick,” says George Gross, professor emeritus of electrical and computer engineering at the University of Illinois’ Grainger College of Engineering.
When one local utility experiences an emergency, it can usually draw extra resources from others. Officials were more worried about this winter storm limiting that kind of aid, given how large of an area it affected. “So many of them are caught in exactly the same trouble that you can’t get necessarily help from your neighbors,” Gross says.
Extreme weather raises prices because of the spike in demand for heating or cooling and congestion along power lines. Supply scarcity can also make energy more expensive and raise the risk of outages if cold spells freeze up the production of natural gas, the primary energy source for electricity and heating in the US. Ice accumulating on power lines and tree branches — the biggest threat to power grids this week — can lead to outages.
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