Thought Leadership

News and Insights

How AI data centers are reshaping the energy grid and what developers can do to get ahead of it

 

As the world embraces the rapid evolution of AI, the infrastructure behind it – data centers – has become a critical force shaping power demand. Those involved in developing and operating these centers are witnessing firsthand the challenges and opportunities that come with providing the amount of power required to sustain the required energy needs. We’re seeing this demand first-hand as we work with our clients developing data centers across the country.

From speed-driven development to navigating complex supply chains and regulatory obstacles, data centers are not just reshaping technology, but also rewriting the rules for energy demand and distribution.

The growing demand for power

Data centers, particularly those supporting AI systems, have triggered an unprecedented surge in energy demand that few foresaw even two years ago. This rapid growth in demand is outpacing the available power supply, creating significant bottlenecks for both the energy grid and data center developers.

One key reason for this mismatch is that many regions simply don’t have the infrastructure to handle such large-scale energy consumption. The challenge isn’t just securing enough power; it’s transporting that power to the data centers in a reliable and efficient manner.

Additionally, the power needed by data centers is not easily scalable within existing grids, causing delays in construction and operation timelines. Even when developers partner with utilities and other energy providers, the infrastructure upgrades required to handle these loads often take years, while demand is growing exponentially. This supply-and-demand imbalance is now a central concern in the energy and tech sectors, as the race to power AI-driven facilities intensifies.

Speed over cost: The pressure to deliver

Data centers are built with one goal in mind: getting operational as quickly as possible. Developers are relying on temporary generation (diesel or similar) to power buildings before they can get connected to the grid, and consultants with a suite of services can assist in guiding them through the process.

While this speed-to-market solution is not sustainable long-term, it allows data centers to come online quickly and start serving clients. These temporary measures reflect a broader trend in the industry, where the pressure to launch often outweighs the initial costs of development.

One of the major hurdles facing data centers is the availability of critical equipment. High-voltage electrical components – necessary for the massive energy demands of these centers – often have lead times of well over a year due to supply chain bottlenecks. This supply chain issue means that even when developers secure the necessary power, they may face delays in getting their data centers fully operational. As a result, many projects are being fast-tracked. Atwell is often leveraging national supplier relationships to ensure developers’ essential equipment arrives as quickly as possible. .

Delays in bringing a data center online can result in lost revenue opportunities, unserved demand, and weakened competitive positioning. Speed-to-market is crucial, and this collaborative effort is essential to meet customer demand, mitigate potential revenue loss, and ensure business continuity.

Self-generation and grid expansion

Given the challenges of sourcing power from the traditional grid, some developers are exploring alternative solutions. Self-generation of power – whether through natural gas or renewable sources – has become an increasingly viable option for data centers coming online quickly. Atwell can assist developers in identifying and implementing self-generation solutions by providing comprehensive site analysis and feasibility studies. Further, Atwell’s expertise in navigating regulatory approvals, interconnection support, and securing permits accelerates project timelines, helping developers bring energy solutions online more quickly.

Grid expansion remains a key focus for the long-term success of data centers. Developers are pushing for new transmission lines and infrastructure improvements to support the growing electricity demand. Working with public utilities and regulators, they are exploring ways to expand the grid without passing on the costs to local ratepayers. Atwell has the ability to do injection studies where we work with the utility provider to find an acceptable locations.

The sustainability question

While speed and efficiency are the primary drivers of data center development, sustainability is an increasingly important factor. Many developers are exploring ways to reduce the carbon footprint of their facilities, whether through renewable energy or improved efficiency measures. Federal incentives and tax credits are helping to make these initiatives more attractive, encouraging developers to incorporate green technologies into their plans.

The transition to sustainable energy sources is not without its challenges. Renewable energy projects take time to develop, and the supply chain constraints affecting traditional power infrastructure also impact green technologies. In the short term, many AI data centers will continue to rely on non-renewable power sources, such as diesel generators, until the grid can support their long-term sustainability goals.

Many developers are exploring ways to reduce the carbon footprint of their facilities through renewable energy and other measures. 

The road ahead

The future of data centers is inextricably linked to the evolution of the energy infrastructure that powers them. As demand continues to grow, it’s clear that the traditional grid alone cannot keep pace with the speed and scale required. This presents an urgent need for investment in grid expansion and modernization. Atwell is uniquely positioned to help developers navigate this dynamic landscape by providing the expertise needed to accelerate project timelines and secure reliable energy solutions.

As we move forward, the challenge will be in striking a balance between immediate power needs and long-term sustainability goals. The AI-driven energy needs show no signs of slowing down, and the race to build energy infrastructure to support it is more critical than ever. With a deep understanding of both the technical and regulatory aspects of power and energy, Atwell is committed to guiding our clients through this period of rapid transformation.

About the Author

Travis Bousquet

Director

With more than 30 years of experience, Travis oversees land development projects for various clients, from planning and design to entitlement and permitting. He is passionate about creating sustainable and innovative designs that enhance the communities and environments where we work.

About the Author

Scott Perrie

Director, Strategic Construction Solutions

With more than 20 years of specialized experience in the power and energy markets, Scott’s expertise includes designing renewable energy collector and substation systems, conducting power system studies, and managing underground and overhead distribution and transmission. He currently oversees various activities for the EPC team at Strategic Construction Solutions, including engineering, equipment procurement and providing technical support during construction. He has served as Lead Engineer for more than 2,000 MW of renewable energy projects across the US and Canada.

About the Author

Courtney Schmidt

Vice President

Courtney has managed and provided technical expertise to programmatic efforts across the country for over 22 years. She has passion and experience in building teams across geographies and disciplines, siting facilities, and managing development and operations activities for clients.

News and Insights

The power of early and thoughtful community engagement: Reducing risks for developers and community members

 

Danielle Peoples is a Project Director for Communications and Stakeholder Engagement at Atwell. Danielle has a passion for community engagement and getting “boots on the ground” as soon as possible to immerse her team in a community’s priorities and sentiments. In this blog, Danielle shares why it is essential to prioritize community engagement and that while there are best practices, there is no one-size-fits-all approach.

Years ago, I started using a downhome phrase within my project teams that I still pull out today: Follow the Mama Rule. It’s my light-hearted way to encourage team members to slow down and think about the people and places that will be impacted by a project. By thinking about the figurative “Mama” of the community, we can try to empathize about what Mama would want to know:

  1. Tell her the plan and get her thoughts.
  2. If the plan changes, give Mama the update and explanation.
  3. And, importantly, clean up our mess when we’re done and share appreciation for the support.

In our work, the communities we’re connecting with are “Mama”—we want them to know what’s going on, support the process, and keep them informed along the way.

Start early, stay engaged

I’ve never heard the sentiment from a project team that they started community engagement too early; I have heard them commiserate that they started too late. Because the risks and opportunities with community engagement have the potential to make or break a project, it’s ideal to start the community and stakeholder research at the very beginning of a project. Early engagement lays the groundwork for trust, support, long-term benefits, and community-led insights to avoid surprise complications.

Time and again, we’ve seen how this early investment pays dividends over the long-term as stakeholders have a clearer view of the intention and community members feel included in the success of the project. Bringing the community through the evolution and decisions for the project contributes to the trust and inclusion that community members feel.

Research the community thoroughly

With our clients, we often start our scope with community and stakeholder research. This involves seeking to understand the community’s history and current priorities, to identifying community members who are likely to have an influence on people’s attitudes toward the project. Recognizing the decision-makers who can impact the success and timeline for the project’s development is also a vital part of this process. This is the foundational information that helps us design an informed communications and engagement plan with our clients.

How, then, do we go about researching these communities to understand their values, their priorities, and their opinions? We use a two-fold approach to do our research: 1) Desktop research of available public information, and 2) Site visits along with information gathering interviews.

Desktop research involves reading news articles and local history publications, reviewing local government meetings and changes to ordinances and regulations, and reviewing other development and infrastructure projects for benchmarking. We seek to connect the dots with this information to anticipate how synchronizing our communications and initial outreach could build support and meaningful community benefits.

An important part of this research phase is to take the time to go look and go see the community. I remember trying to anticipate traffic concerns that could stem from a project. During a site visit, we realized a large industrial site was already sending dozens of trucks down the same route to the highway. The situational awareness showed that we took the time to understand what was already happening in the community and how our project was part of a much broader experience for stakeholders.

This is also a time to have low-risk, information-gathering conversations with key stakeholders like local government staff, economic developers, and supportive landowners to validate impressions and observations. This is where we identify and begin to manage potential risks and introduce ourselves as people beyond a project name and company logo.

A dynamic, engaging plan is better than a “perfect” plan

I’ve observed a tendency over the years for teams to want to have all the details figured out and questions answered before introducing a project to the community. While the first impression is very important, inviting people to be part of the process of deciding and refining the project is true engagement. Introducing the project and telling the story of why the project is desired is more memorable than all the design details initially. And it can feel somewhat adversarial if people don’t feel like there was an opportunity to give feedback or weigh in on options.

Community-specific tactics that match how people like to receive and share information should be aligned with project milestones and can include one-on-one meetings, group presentations, community meetings and events, fact sheets, visual simulations and tours, and websites. This is another opportunity to invite people to share early on how they’d like to be engaged throughout the project.

Perfection of all the answers you think you should have for the project introduction is not as important as a demonstrated ability to engage with community members, listen and hear their concerns, and respond in a timely manner. As project timelines and expectations are better informed with feedback, the engagement strategy should be updated and discussed amongst the project team dynamically to reflect this.

When we suggest stakeholders should be made aware of changes, that especially includes the community. Trust is broken more easily than it is built, and if the trust of a community is broken due to lack of communication, the risks to long-term success will only increase.

Consistency and proactivity benefits everyone

Throughout my career, I’ve learned that something as simple as showing up consistently with the same people, the same faces, and being timely in responses can make all the difference. This consistency doesn’t just apply to the initial days, either. Honoring commitments made through construction and operation helps not only the project reputation but all developers, current and future.

Proactive messaging also allows the client to determine and set the project narrative. If a developer assumes they should wait to speak about the project until they have all permits approved and in hand, it creates a void. That void can be easily filled by detractors, allowing them to step in and create a negative narrative about the project. That is obviously not ideal and can cause communication to suddenly become reactive.

Ultimately, community engagement is more than a nice add on – it is crucial to project success. A well-engaged community leads to smoother project approvals and sticking to the scope, schedule, and budget for our clients.

Connect with Danielle to discuss further how Atwell can support your efforts to follow the “Mama Rule” with thorough research, development, and coordination of communications and stakeholder engagement plans for your projects.  

About the Author

Danielle Peoples

Project Director for Communications and Stakeholder Engagement

Danielle Peoples is the Project Director for Communications and Stakeholder Engagement. She has more than 13 years of industry experience in strategic engagement, change management, communications, and crisis responses. She is passionate about community engagement and giving back to her community.

News and Insights

Election 2024: What it means for the energy industry and clients

 

By Jason Utton

As the 2024 presidential election approaches, the energy industry faces a period of uncertainty, with the outcome poised to shape the future of domestic energy policy and international relations. Whether the next administration prioritizes renewable energy, fossil fuels, or energy infrastructure, its decisions will have profound implications for the industry’s direction and the country’s role in the global energy landscape.

Possible impacts to fossil fuels and deregulation

The speed and direction of the energy industry will depend heavily on the election’s outcome. If Donald Trump is re-elected, expect a shift toward policies that favor fossil fuels, deregulation, and a focus on U.S. energy independence. Trump has been a vocal critic of climate initiatives and would likely pull the U.S. out of the Paris Agreement once again, while also aiming to reverse efforts like the Securities and Exchange Commission’s (SEC) push for corporate climate risk reporting. His administration would likely backtrack on domestic climate goals, prioritizing economic growth over emissions reductions.

A key pillar of Trump’s energy plan would be to expand drilling locations for natural gas on federal land and lift restrictions on liquefied natural gas (LNG) exports. He is also expected to pursue heavy tariffs on imports, particularly energy-related imports, which could trigger a trade war with key international partners. While such tariffs could boost domestic production, they also pose risks of increasing consumer costs and long-term volatility, particularly if major energy exporters retaliate.

Despite Trump’s ambitions to reshape energy policy, any substantial legislative changes would require bipartisan support. Divided government remains the most likely scenario, with projections showing the GOP likely to benefit from a favorable 2024 Senate map, while Democrats are expected to regain a narrow majority in the House. Even if Republicans secure control of Congress, sweeping changes – like a full rollback of the Inflation Reduction Act (IRA) –would be difficult to achieve without cross-party compromise due to the slim governing margins.

The Inflation Reduction Act: Strong bipartisan roots

Certain provisions within the IRA, such as tax credits for carbon capture and storage (45Q), hydrogen production (45V), clean fuel production (45Z), and manufacturing incentives (45X and 48C), have bipartisan support, particularly in rural and industrial communities. For example, most wind farms and solar facilities are in Republican-leaning rural districts, where these initiatives have created jobs and economic benefits. These factors make a complete repeal of the IRA unlikely, even under a second Trump administration.

If Kamala Harris is elected, her administration would likely continue the current trajectory set by the Biden administration, focusing on expanding clean energy initiatives and strengthening the implementation of the IRA. The Harris administration would prioritize distributing IRA funds to local communities, supporting renewable energy projects, and promoting grid modernization. However, even if Democrats win a governing trifecta, enacting sweeping changes requiring congressional action would likely result from intraparty compromises.

In contrast, a Trump administration would focus on leveraging domestic energy resources, such as expanding drilling and natural gas production, while also emphasizing trade policies that protect U.S. energy industries. This approach could create tension with global trade partners, potentially limiting international energy cooperation, but it would prioritize the expansion of U.S. energy dominance. Balancing these domestic opportunities with the risk of international isolationism would be a central challenge for a second Trump term.

The role of Congress: Bipartisan challenges ahead

Regardless of who occupies the White House, the makeup of Congress will play a significant role in in shaping energy policy. Experts believe that policy changes requiring congressional approval will hinge on bipartisan negotiation, driven by narrow governing margins.

One of the most pressing fiscal issues in 2025 will be the expiration of several tax provisions from the 2017 Tax Cuts and Jobs Act (TCJA) – approximately $5 trillion in tax cuts passed by President Trump. Extending these cuts will require substantial revenue offsets, and some lawmakers may argue for repealing portions of the IRA to cover the costs. However, such a move could face strong opposition from both Democrats and Republicans who support the job-creating provisions in the IRA.

As energy infrastructure projects require long-term investments and planning, a cooperative bipartisan approach will be critical to ensure progress continues amid political transitions.

Grid modernization: A shared priority

One area where both parties may find common ground is the need for significant improvements to the nation’s aging power grid. Over 70% of the U.S. grid is older than 25 years old, and as renewable energy projects come online and electricity demands rise, modernizing the grid will be crucial to meeting future energy needs. Upgrades will require building new transmission infrastructure, expanding interconnection capacity, and ensuring that renewable energy can be delivered efficiently to customers.

The growing role of datacenters, artificial intelligence, and advanced manufacturing will further drive electricity demand, adding urgency to the need for a more reliable and resilient grid. Both Republican and Democratic administrations recognize these challenges, and federal support will be essential to streamline permitting processes, fund large-scale infrastructure projects, and ensure grid stability in the years ahead.

Final thoughts

The 2024 presidential election is a key variable in determining the future of U.S. energy policy and its impact on both domestic markets and global geopolitics. Most projections suggest that divided government remains the most likely scenario, with narrow majorities in both the House and Senate. Even if either party gains full control of the government, enacting sweeping changes to federal energy policy will be a challenge due to the complexities of the legislative process.

While the Trump administration would likely prioritize fossil fuel expansion and trade protectionism, and the Harris administration would focus on continuing clean energy investments, one thing is certain: energy policy will remain a central issue in U.S. political discourse. Regardless of which administration is in power, renewables and energy storage are expected to dominate the energy transition due to their lower costs and faster speed to market, positioning the U.S. as a leader in the global energy transformation.

About the Author

Jason Utton

Senior Vice President

Senior Vice President of Atwell’s Power Group, Jason Utton has been developing renewable energy projects for more than 17 years, with experience in wind, solar, and battery storage projects across the country. He currently provides large scale investment and development clients with business goal setting, renewable portfolio optimization, and capital deployment strategies.