AI’s Volatile Power Demand Is Damaging Its Own Data Centers

Article content

Most equipment isn’t designed for such big swings in power consumption. Jon Parrella, chief executive officer of energy-storage developer Terraflow Energy, likens it to driving a Ferrari and shifting straight from sixth gear to first. “You can’t swing that fast,” he said. 

Article content

This story is based on interviews with more than three dozen power experts in the US and Europe, including generators and other power suppliers, data-center developers, grid operators, utilities, investors, standards developers, insurers and regulators, almost all of whom said the physical stresses on the facilities were evident. 

Article content

Cranks on small natural gas combustion engines used to generate power at data centers have broken off, several of those people said. At xAI’s Colossus computing facility in Memphis, Tennessee, gas-fired turbines had developed cracks, one of the people said. Batteries were installed within the system to help smooth out power swings and reduce the strain on spinning turbines, the person said.

Article content

SpaceX, the parent company of xAI, didn’t respond to requests for comment.

Article content

Article content

Article content

Turbines have also cracked at much smaller data centers in the UK, said Andrew Cunningham, CEO of GeoPura Ltd., which is providing hydrogen for use in fuel cells that smooth out power flows at some sites.

Article content

Cracks or wear on devices can cause electrical arc flashes — when a current jumps between conductors — potentially damaging AI chips, said Jennifer Scanlon, CEO of UL Solutions Inc., which tests and certifies new technology.

Article content

There is a suite of equipment such as batteries, capacitors, transformers and flywheels that can help stabilize power flows. However, in the bid to build AI computing capacity quickly not enough of these technologies are being used at new data centers, several of the people said. Batteries that have been installed for this purpose have sometimes needed to replaced within months or even weeks due to the high strain, according to the Uptime Institute and other people working with operators.

Article content

This problem is seen at data centers around the world, from the Middle East and Africa, to Europe and the US, said Villegas-Williamson of the Uptime Institute. 

Article content

Article content

Reliability Problems

Article content

These issues are already causing delays or curtailing operations – and therefore revenue – at some AI computing facilities. 

Article content

To ensure that a planned 2.67-gigawatt AI campus in West Texas can achieve the 99.999% reliability required by Microsoft Corp., extra time was baked into the schedule for engineering, said Chris James, CEO of Joulent Inc., which is developing the facility with energy giant Chevron Corp. This means power delivery will begin in 2028 instead of 2027, he said. 

Article content

If essential equipment breaks down prematurely, “the financial consequence is not primarily replacing a pump or a breaker or some power component — it’s the the value of that expensive compute capacity not generating revenue because it’s offline,” said Jason Hoffman, chief strategy officer at data-center builder and operator Switch.

Article content

The cost of downtime in terms of lost revenue varies widely, with estimates ranging from thousands to hundreds of thousands of dollars per minute, depending on the type of facility and its workload.

Article content

Data centers are built on the assumption that, once they are online, they will operate around the clock 365 days a year, said a person involved in the financing of such facilities. In reality, some are seeing uptime closer to 80%, and unless resolved this could hit investors in certain projects in the next 12 to 24 months, the person said.