NEW YORK: The boom in power demand from data centres and artificial intelligence (AI) is creating a conflict between maintaining a reliable grid and cutting carbon emissions, according to the head of Dominion Energy Inc.

“There’s a little bit of tension there because there’s not a lot of opportunities” in the near term to build zero-emissions generation that can be adjusted to match supply and consumption, chief executive officer Bob Blue said.

“Anything that’s driving demand is gonna make it harder to retire existing fossil units. That’s just sort of basic physics.”

Blue said the big technology firms operating in Dominion’s territory recognise the inherent difficulty of their push for higher amounts of reliable and carbon-free power.

“That’s what they’re after,” he said in an interview. “And we’re all gonna have to sort out how this works going forward.”

Virginia, where Dominion is based, is the global centre of the rapidly expanding data-centre industry.

The utility has projected that its power demand will double by 2039. To help meet that increase, it plans to build large amounts of solar, wind – including the biggest offshore wind farm in the United States – and gas power, as well as battery storage.

Blue emphasised that Dominion is still transitioning from coal to gas, which among other efforts has allowed the company to cut its carbon emissions by more than half since 2005.

He also said that while Virginia law requires Dominion produce electricity from only renewable sources by 2045, the law doesn’t require state regulators to make decisions that will hurt grid reliability.

“We wouldn’t be pursuing natural gas generation if we didn’t think it was critical for the reliability of the grid,” he said.

Clean energy tax credits in the Biden administration’s Inflation Reduction Act (IRA) are important to keeping Dominion customer costs low, Blue said.

As lawmakers and president-elect Donald Trump consider changes to the IRA, they should consider how reduced tax credits would make some Dominion projects more expensive, he said.

“There are potential affordability effects that I think it’s important for lawmakers to understand,” Blue said. 

 - Bloomberg