Even Susitna dam would not generate enough power to run one of the giant data centers Dunleavy envisions
From a December 13 presentation to the Alaska Gasline Development Corporation board about how large power plants burning discounted natural gas might make giant computer data centers economic.
The giant computer data centers that Gov. Mike Dunleavy is promoting as the next big thing for Alaska would consume far more power and natural gas than the utilities from Fairbanks to Homer rely on today.
A 1 gigawatt data center—on the low end of the Dunleavy vision for power—would require twice as much electricity than could have been drawn from the 700-foot Susitna dam that was never built. A gigawatt is 1,000 megawatts.
The Alaska Gasline Development Corporation is speculating that electricity prices for Railbelt consumers could plummet to 4 cents a kilowatt hour if three data centers, each drawing 3 gigawatts, could be built on large tracts of land, powered by electric plants burning natural gas.
Nine gigawatts is enough power for 6.7 million homes. The new power plants would burn 585 billion cubic feet of gas a year, which is more than eight times what is burned today for heat and electricity from Fairbanks to Homer.
These enormous data centers, which would be built on thousands of acres—would require power plants with far more capacity than anything in Alaska today.
Dunleavy says that a data center could be an anchor tenant for a gas pipeline from the North Slope, with the data center pledging to buy enough discounted gas for decades to make a pipeline viable.
On December 13, Frank Richards, the president of the Alaska Gasline Development Corporation, gave the AGDC board the current theory about how the growing worldwide demand for cheap electric power for AI computing could intersect with the eternal Alaska gas pipeline dream.
A 1-gigawatt power plant would use 65 billion cubic feet of gas per year, compared to the 75 billion cubic feet of gas now consumed in Alaska for electricity and heating.
The power plant connected to the data center would get a volume discount for gas. A 1-gigawatt power plant would pay 5 cents a kilowatt hour for electricity, about half of what Alaska consumers would pay.
With additional data centers, the volume discount at 9 gigawatts would translate into 3 cents a kilowatt hour for the computer centers and 4 cents a kilowatt hour for utility customers.
(Remember, this is theory, not reality. Railbelt utility customers are now paying from 19 cents to 31 cents per kilowatt hour, with the highest rates in the Fairbanks area.)
Richards said that data centers use about 50 percent of their power for cooling, so Alaska has an advantage there.
He said Dunleavy is making this pitch to industry: “Come to Alaska, look at what we have to offer. We have abundant land. we have abundant water. And oh by the way, we’re gonna be building a pipeline to bring North Slope gas down to Southcentral Alaska.”
“So he has actively engaged in discussions with folks from these data centers.”
“They’ve come to the state. He’s traveled with them to look at opportunities across the state and he’s very bullish that they’re going to come and this is going to be a new economic opportunity for Alaskans, not only construction, but ultimately in operations for data centers in the state of Alaska.”
“So the data centers he’s talking about are very large. So they’re going to require a significant amount of energy. The talk has been that a gigawatt plus of power per facility,” said Richards.
“That’s a very large amount of energy. So what we’ve done in discussions with the governor is what would it mean to provide energy to a data center in addition to the gas demands within Alaska,” he said.
As shown in the chart above, the volume discount for a 1-gigawatt data center would reduce the gas cost for Alaska consumers from $12.45 to $10.85, in theory.
“As data center demand would grow, there would be a slight reduction in cost for the data centers and also more significant cost reduction for Alaskans,” Richards said.
With 3 gigawatts of data center power—which is more than the annual Alaska energy production today—gas prices from the pipeline would be $7.93, below the cost in Cook Inlet now, he said.
“The volume discount Alaskans would receive from large industrial demand coming into the state of Alaska. That’s why I believe the governor is very excited about this because it allows for new economic opportunity, a new base of jobs and resources to grow. It provides Alaskans then the ability essentially then to have lower costs from a North Slope natural gas pipeline,” Richards said.
The Rampart Dam proposal, a mega hydroelectric project considered in the 1950s for the Yukon River, was based on a vision that abundant power would attract industry. The $11 billion gas pipeline is now being promoted as something similar.
There are many factors to consider, ranging from climate change to cheaper gas supplies available elsewhere.
Among the big questions:
Why build a $11 billion pipeline to get the gas to Southcentral?
Why not build the power plants for data centers on the North Slope and figure out what data connections to major world centers would cost? The lack of infrastructure on the North Slope is going to be a challenge, however.
What about the emissions from the giant power plants? What will the impact on the climate be? Carbon capture storage will be promoted as an option, but much is unproven.
Why should data centers pay 5 cents a kilowatt hour when Alaskans would be paying twice as much under this highly speculative theory about future prices?
Are the major companies that would build data centers really going to put up billions and sign long-term energy supply to finance this pipeline to the power plants they want?
Other places in North America are trying to cash in as well. How would Alaska compete with Alberta, which is using the lure of cheap natural gas to try to attract $100 billion in data center investments?
Then there is the usual megaproject question: What could possibly go wrong?
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