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AI Driving North Dakota Data Centers Demand at Accelerating Pace

By Bill Dubensky Aug 2, 2024 | 5:29 AM

 

(North Dakota Monitor) -Artificial intelligence is driving the demand for power-hungry data centers with North Dakota seen as one of the few areas capable of meeting that demand, but not without risks.

Data centers and large power users were the subject of a discussion led by the North Dakota Public Service Commission. Representatives of the energy industry, state and local government and data centers explored where power demand is coming from and how that demand might be met.

While North Dakota generates a lot of electricity, meeting the energy demand will likely also involve the state’s excess natural gas, a byproduct of oil production.

“The ability to develop this much power may exist only in North Dakota right now, in terms of the ability to permit something, the ability to build something, the ability to have this much natural gas to do this, that opportunity exists here,” North Dakota Commerce Commission Josh Teigen said, adding that just in the past few weeks there has been more interest from large power users.

 Randy Christmann, center, chair of the Public Service Commission, delivers remarks prior to a panel discussion on data centers next to other members of the commission, Sheri Haugen-Hoffart, left, and Julie Fedorchak, right, in the Pioneer Room at the Capitol on Aug. 1, 2024. (Michael Achterling/North Dakota Monitor)

According to the North Dakota Monitor the Public Service Commission has no authority over where data centers might locate but it does regulate investor-owned utility companies that may supply data centers with power.

PSC Chair Randy Christmann questioned how the state can avoid a repeat of a situation in Williams County where a data center’s power demand has driven up electricity rates for other customers.

“We end up being the ones who mop up the mess when things happen without any regulation,” Christmann said.

He also mentioned noise complaints about the Atlas Power Data Center near Williston, which is supplied by the Mountrail-Williams Electric Co-op.

A lack of transmission line capacity is partly to blame for the situation.

“It wasn’t just a slight miss on the integration of that large load in western North Dakota,” Public Service Commissioner Julie Fedorchak said. “It was a big miss.”

Matt Hanson, CEO of the McKenzie County Electric Co-op, said the oil and gas industry has been good about paying its fair share of power costs and he expects the same of data centers.

“The last thing we want to have happen is our legacy farmer and rancher be paying for large transmission and large infrastructure,” Hanson said.

Adding power generation and transmission capacity is key, he said. “There’s a lot of great transmission that’s getting built, and it’s going as quick as it can, but there still needs to be ways to figure out how to get it quicker,” Hanson said.

Applied Digital, which operates a data center at Ellendale in south-central North Dakota, was lauded as an example of how the industry can benefit North Dakota.

Etienne Snyma, Applied Digital’s executive vice president of power, said the site was chosen because the area has an excess of electricity generation, much of it from wind.

The company is working with the state to expand housing in Ellendale as it ramps up for an expansion so that workers can live nearby instead of having to commute in from places like Aberdeen, South Dakota.

 Aaron Birst, executive director of the North Dakota Association of Counties, speaks during a panel discussion on data centers hosted by the Public Service Commission at the Capitol on Aug. 1, 2024. (Michael Achterling/North Dakota Monitor)

Fedorchak advocated for North Dakota to be aggressive in expanding power production and transmission, saying the state and the country should not outsource AI technology centers.

When asked about the importance of keeping AI centers, Snyman said, “Historically, outsourcing lagging-edge, low-paying jobs has benefited the U.S., but outsourcing leading-edge technology will eventually lessen our country’s standing in the world.”

Teigen cautioned against adding state oversight to data centers that might slow down development.

Aaron Birst, executive director of the North Dakota Association of Counties, said data center permitting should remain a local government decision.

Christmann was more cautious.

“We have this responsibility to look at adverse impacts, to cultural resources, to the environment, to that neighborhood, to the citizens who live there,” he said.

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