by Emily Jones, Georgia Recorder [This article first appeared in the Georgia Recorder, republished with permission]

March 4, 2024

Georgia’s energy regulators are considering Georgia Power’s request to generate and buy more electricity to meet what the utility calls a surge in demand from new businesses in the state. State lawmakers, meanwhile, are grappling with a leading source of that increased power demand: high-tech data centers.

Georgia Power says the spike in demand is so high and will be needed so soon that it needs to rapidly add sources of electricity to the grid, so it has filed an update to its long-range power plan, known as the Integrated Resource Plan or IRP. The company is seeking approval to buy electricity from other utilities, build new gas and oil turbines at an existing power plant, and build new solar and battery storage.

But in recent hearings before the Georgia Public Service Commission, experts, advocates, and members of the public questioned the utility’s forecast and its plans to meet the demand.

“Their plan relies largely on the same old technology: power from coal- and gas-fired power plants,” said Larry Heiman of Dunwoody during the public comment section of Thursday’s hearing. “My question is, doesn’t this unprecedented situation deserve some unprecedented thinking?”

These proceedings, focused on sources of energy, don’t dig into what any changes will ultimately cost customers. Georgia Power rates have gone up four times in the last fourteen months, with the PSC’s approval. Any decisions about the impact to rates from these proposed changes would come later. 

Planning for the future

The latest hearings were the second phase in Georgia Power’s IRP update. In January, the Public Service Commission heard from the utility. This time, expert witnesses for the commission’s staff as well as stakeholders – including environmental and consumer advocates, municipalities, energy providers, and major electricity customers like Walmart and the Department of Defense – weighed in.

They criticized Georgia Power’s request on several fronts.

Witnesses for the PSC staff pushed back on the utility’s projections. Georgia Power claims the increased demand is coming so quickly that it needs to act now, rather than waiting for the regularly scheduled IRP proceeding next year. But the PSC staff witnesses disagreed. The actual need, they said, would likely take longer.

“The load forecast that we’ve produced…indicates that we do have more time,” said PSC staffer Robert Trokey.

Witnesses also questioned Georgia Power’s plans for how to meet the increased power demand, particularly the company’s reliance on fossil fuels The utility’s plan includes solar energy but also relies heavily on fossil fuels in the form of new oil and gas turbines, buying power from other utilities that use more fossil fuels, and the possibility of running coal plants longer than planned.

Expert witnesses suggested several alternatives to Georgia Power’s plan. The utility could add capacity by upgrading to transmission lines that can handle more power, a witness for the Southern Alliance for Clean Energy suggested. Others proposed a system of solar panels and batteries located at homes and businesses throughout Georgia Power’s territory that the utility could draw on when it needs extra energy.

Solutions like this, they argued, could be built more quickly and often more cheaply than the plan the utility has proposed.

Healthcare professionals and public health students spoke during the public comment section of both days of hearings, reminding the commission of the negative impacts of climate change and air pollution on health, from heat-related illness to worsening asthma and allergies to water-borne pathogens due to floods.

“The burning of fossil fuels causes climate change and air pollution, and these things are killing us and making us sick,” said pediatrician Preeti Jaggi.

Data centers incentives in limbo

Georgia Power says that 80% of the new electricity need driving its request comes from data centers, the large buildings packed with computer servers that facilitate websites, apps, and other online activities. 

Every time you send an email, go to a Zoom meeting, or stream a movie, you’re using data. It has to come from somewhere: generally, a data center full of computer servers.

Data centers have enjoyed a tax break in Georgia since 2018, but that could soon change: a bill that has passed the state House would suspend the data center tax exemption, which could further complicate the energy outlook in Georgia.

“Data centers enable the apps, platforms and services that we use personally and professionally every day,” said Josh Levi, president of the Data Center Coalition. “They keep us connected in our modern lives.”

Since the introduction of the tax exemption for data center equipment in 2018, metro Atlanta’s data center market is booming.

The goal of tax incentives like this is to spur economic development. Levi said data centers give rise to other businesses, from IT maintenance to HVAC to security.

“They tend to develop and expand entire ecosystems around them,” he said.

But the rush to supply enough electricity for the influx of data centers has state officials second-guessing the tax break. House Bill 1192, which is now before the state’s Senate Finance Committee, would suspend the tax break and create a special commission to look at where data centers should be located and how to supply them with energy.

“Well, better late than never,” said Mark Woodall, the legislative chair for the Georgia Chapter of the Sierra Club. “They should have studied it when they were giving it away.”

Instead, the Public Service Commission is now weighing the questions that HB 1192 would put to its special commission.

“So we got a big mess here,” Woodall said. “And the first thing we can do is quit digging the hole.”

Opponents of the bill are concerned that doing away with the tax incentive would hurt job growth and economic development in the data center industry and beyond.

“Without that incentive, I think data center owners are going to be challenged in recruiting tenant investment in jobs and bringing them to the state,” Levi said. “The abrupt suspension of the programs…sends a contrary signal, not just to the data center industry, but I think to the larger business community.”

The bill would grandfather in the sales tax exemption for data centers that have already applied for their certificate of exemption. But the uncertainty for centers that are in earlier stages of development could have significant bearing on the energy that Georgia Power will need.

The utility’s forecasting in the IRP update, its representatives have testified, is based on “tangible projects” the company is aware of through discussions with prospective customers. Much of the criticism leveled at Georgia Power in the hearings, however, focused on the likelihood of those prospective customers turning into real ones who actually purchase the electricity the utility says it needs to generate.

“We cannot say for certain that they will materialize fully or actually situate within Georgia Power’s service territory,” said consultant Karan Pol, who testified Thursday on behalf of PSC staff.

Suspending the tax incentive, Levi said, would add “uncertainty and a lot of risk” for data centers considering locating in Georgia. If the future of data center development in the state is uncertain – so too is just how much electricity they will need.

This coverage is made possible through a partnership with WABE and Grist, a nonprofit, independent media organization dedicated to telling stories of climate solutions and a just future.

Georgia Recorder is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Georgia Recorder maintains editorial independence. Contact Editor John McCosh for questions: info@georgiarecorder.com. Follow Georgia Recorder on Facebook and Twitter.