How AI Data Centers Are Reshaping the Evolution of the Grid

Bigger, more erratic loads

For decades, data centers have been ideal customers for utilities – consistent, steady loads that grew in a fairly predictable arc. With the advent of AI, however, data centers are now one of the fastest growing consumers of power on the grid, as well as one of the most complex and unpredictable.

The reason is the growth in AI workloads, which behave very differently from how data centers operated until just a few years ago. Scale and consistency have now been replaced by intensity and variability as the dominant performance characteristics. Although, truth be told, scale remains an important factor; a few years ago, a 100-megawatt data center was a rarity – we are now seeing the development of gigawatt-scale campuses.

Still, what makes today’s environment truly unique is this unpredictability. AI training models can be ‘spikey,’ operating in peaks and troughs, which cause rapid increases in power usage and cooling requirements, which can then drop off equally suddenly. This in turn can put stress on the grid, which operates best when conditions are smooth and controllable.

This is not the world that today’s grid was designed for, nor do grid operators have the tools in place needed to manage this challenge effectively. They need more flexible infrastructure and control systems that enable them to adapt quickly to changing conditions, while still maintaining the resilience of their operations.

The question is no longer whether utilities can supply enough power, but whether they can adapt fast enough to meet the dynamic, often volatile needs of AI data centers. Flexibility is now a paramount requirement.

Becoming one with the grid

For data center operators, access to power has become the number one factor in the siting and development of new facilities. Grid interconnection queues, particularly in North America, can be lengthy, often stretching into years. This is starkly at odds with the development cycles in the IT industry. As a result, for developers seeking locations in which to establish new facilities, electricity is often the limiting factor.

This means that data center operators can no longer be passive consumers. They need to become active participants in an increasingly dynamic, distributed, and diverse energy ecosystem. In some cases, this means they need to consider adopting technologies such as battery energy storage, on-site generation (solar and wind), battery energy storage systems (BESS), hydrogen-ready engines, and other ‘behind the meter’ solutions, along with sophisticated energy management systems. As important, they need to change their relationship with utilities and their technology vendors, in some cases applying techniques such as load shaping and demand response that can help shift the availability of power to off-peak times to reduce pressure on the grid.

Adopting prefab, modular solutions

One option that has emerged in recent years is using modular, prefabricated grid infrastructure, such as compact substations that integrate high-efficiency transformers, gas-insulated switchgear, and more into a simple, easy-to-deploy form factor. This approach can be particularly beneficial in tightly packed urban settings and can also help cut deployment times in areas where permitting is a challenge.

In Ireland’s Castlebagot region, for instance, which is faced with significant grid constraints, a hyperscale data center operator deployed a compact substation to support a new campus. This creative approach enabled the operator to accelerate timelines and overcome space limitations - an approach now being adopted in other regions (including the US) that offers the potential to significantly speed up deployment of essential digital infrastructure. 

Real-time optimization through digitalization

Data centers increasingly demand power systems that are more complex, which require more sophisticated management systems. Digital technologies like predictive analytics, smart transformers, intelligent switchgear, and real-time monitoring and asset management systems can enable operators to detect issues early, optimize energy flows, and support dynamic approaches to managing consumption. AI not only places new demands on energy infrastructure but also promises to transform how we operate and maintain the grid. Smarter infrastructure can better anticipate fluctuations, prevent or mitigate disruptions, and enable the adoption of new business models.

The adoption of new technologies cannot be pursued in a vacuum. Neither data center operators, nor utilities can address these challenges on their own – they need to collaborate and widen their circles to include regulators, equipment manufacturers, governments, and more to reimagine the future of power systems. In projects where IT and energy stakeholders engage early, the results are consistently better: shorter timelines, improved sustainability, and greater resilience.

Most importantly, they need to build flexibility into their systems and operations so that they can adapt to future changes in the market, which are certain to come.