Experts predict a significant surge in electricity demand from data centers in the coming years, fueled by the booming artificial intelligence sector. According to consultants commissioned by Hydro-Québec, energy consumption by data centers is projected to more than double between 2024 and 2030.
During a recent public hearing on Hydro-Québec’s proposal to hike rates for data centers, analysts from the energy consultancy firm Dunsky revealed these alarming forecasts. Quebec’s energy regulatory agency, the Régie de l’énergie, is currently evaluating the potential rate increase.
Dunsky was tasked by Hydro-Québec to investigate how various regions across North America are coping with the escalating energy demands from data centers. Alexis Renaud-Bezot, an analyst, warned that energy usage by data centers in North America could surge by 133% in the next decade.
He emphasized that the growth in energy demand, particularly driven by data centers, is unprecedented compared to the past two decades. Data centers, vital for training AI models, can range in size from 20 megawatts to several thousand megawatts.
To offset the impact on residential customers, some jurisdictions have raised rates for data centers. Hydro-Québec’s proposed rate hike would double the current charges for data centers, making them pay an average of 13 cents per kilowatt-hour instead of the current 6.82 cents.
The state-owned utility justified the increase by citing the rising cost of electricity generation and the need to maintain fair pricing across all consumer segments. Despite the rate hike, Hydro-Québec’s electricity would still be relatively cheaper for data centers compared to neighboring regions.
However, Renaud-Bezot cautioned that data centers could explore more cost-effective options in Ontario, New Brunswick, and certain parts of the United States. He also highlighted the creation of specific rates targeting data centers across North America to mitigate the impact on other consumers.
Concerns are growing about the implications of data centers on energy costs, local resources, and the environment. While opposition within Quebec has been limited thus far, industry players are expected to challenge the rate hike proposal. The hearings will continue with input from representatives of major tech companies like Google and environmental groups in December.
