As electricity demand surges, and older generation sources are retiring faster than new ones come online, officials are grappling with how to manage grid reliability, infrastructure needs, and local and environmental concerns – while exploring policies that strike a balance between supporting smart growth and protecting consumers.

The issue has industry experts divided with some voicing concerns about family sustaining jobs and environmental impact, and others believing an affordable, safe, and reliable energy future is attainable.

A growing trend is co-locating data centers with onsite energy generation, thereby producing their own electricity and potentially sending surplus power back to the grid. The Pennsylvania Public Utility Commission, or PUC, is considering making this a requirement, along with covering the cost of infrastructure upgrades, as it develops a model tariff.

Currently, nuclear-powered Amazon Susquehanna campus is the only operational example of this in Pennsylvania, while two others – Homer City Energy Campus (natural gas) and Beaver Valley (nuclear) – are under development.

Co-located generation is nothing new, says Lehigh Valley engineer and IEEE Standards Association member James Daley.

Daley told The Center Square that the demands of large data centers are comparable to major industrial complexes the grid has historically served – like Bethlehem Steel, for example.

Built in the late 1800s, Bethlehem Steel’s furnaces were primarily powered by steam engines fueled by coal. By the 1910s, they began drawing electricity from local utilities, but as demand increased, dedicated substations and new grid connections were added – costs that the company helped cover. To further reduce demand on the public grid, they eventually built on-site power plants.

Co-located generation is one way to resolve energy demand issues while protecting existing ratepayers, Daley said. Other options include serving the facilities from transmission or sub transmission stations, and the use of nuclear power.

“Diligence and oversight of proposed projects require multiple input sources – not the least of which is the PUC,” said Daley.

Rest assured, he added, locating and powering an IT Center poses no different challenge than large-scale projects successfully handled over the past century. “The PUC makes sure rate payers are not unfairly charged for grid alterations that do not benefit them directly.”

The mix of energy sources is crucial to grid reliability, which Daley says needs to be 24/7, “and you can’t do that with renewables.”

According to the U.S. Energy Information Administration, or EIA, in 2023, 60% of electricity generated was from fossil fuels – natural gas, coal, and petroleum. Additionally, 19% came from nuclear, and renewable energy sources accounted for approximately 21%.

He noted the lower capacity ratings of renewable energy sources compared to those of fossil fuels, citing figures from the US. Department of Energy.

The capacity rating for nuclear is 92.3%, followed by geothermal (65%), natural gas combined cycle (59.9%), and coal (42.6%). Hydro and wind are rated at around 34%, while solar and natural gas simple cycle are 23.4% and 17.2% respectively.

Daley’s comments are supported by a 2024 report by the North American Electric Reliability Corporation, or NERC, warning that the substitution of intermittent renewable energy for baseload 24/7 power has made the nation’s electric grids less resilient, less secure, and less reliable.