Potential for data centers in SOMD

Data centers are a hot topic, and many members of our community are concerned about the possible impact they could have.

One main concern is the impact to the cost of utility bills. A lot of factors impact member bills. Each member’s bill is based on the amount of electricity they have used for that billing cycle. Weather, the home or business’s efficiency, the cost of materials and services, and the cost of power all impact the bottom line of a typical electric bill.

Capacity prices for wholesale power have spiked in recent years because the margin between the demand for power and the available supply of power has grown tighter. One factor impacting the increase in demand is the increase in data centers. Artificial intelligences such as ChatGPT and Google Gemini require massive data centers to operate. The facilities, which house collections of computer servers, consume gargantuan amounts of electricity. With AI use skyrocketing, data centers are multiplying and growing in an attempt to keep up.

A typical data center uses the equivalent energy use of 100,000 homes, and when the largest centers currently under construction in the country come on line, they will use as much electricity as 2 million homes. And unlike a residential utility customer who uses less electricity overnight, a data center operates around the clock.

A major challenge for Maryland is that it consumes more electricity than it generates, relying on the regional grid to make up the difference.

The cooperative is evaluating requests from organizations interested in building data centers in Southern Maryland. The requests include usage estimates well beyond anything we have ever experienced. SMECO cannot evaluate these facilities on our own. We have been working with Pepco engineers to help determine the load requirements and how to accommodate the demand as our transmission facilities are connected to Pepco’s.

SMECO is a distribution utility and we are required to provide service to anyone who requests connection to the grid; however, any data center seeking to build in Southern Maryland must pay for all transmission and distribution infrastructure expenses associated with locating in our service territory.

State law requires that data centers must pay to interconnect to the grid and that existing ratepayers do not subsidize those costs. There is legislation pending before the General Assembly that would require data centers to offset their demand on the grid with new generation. Those discussions are ongoing, and SMECO is part of those discussions.