There’s an air of inevitability when people talk about generative artificial intelligence and how it will transform our world.
It certainly benefits Big Tech for us to talk about their products like the weather — inevitable, unchangeable.
Arizona Daily Star columnist Tim Steller
That way, we never consider whether what they’re doing is good for us or how we might want to manage change. It all becomes an inevitability that we are powerless but to accept.
That occurred to me while reading my colleague Tony Davis’ story on this year’s race for Arizona Corporation Commission. One of the reasons that this year’s race is so high-stakes is that the demand for electricity is expected to surge over the next decade.
As a result, whatever majority is elected into office will be able to shape how we respond to Big Tech’s insatiable demands for energy, and how we’ll protect the public’s interests.
This was not predicted. Just last year, Tucson Electric Power projected demand increasing at a rate of 1% per year. Now they’re projecting 5% per year increases, with a total of a more than 50% increase over the next decade. Arizona Public Service is projecting about the same percentage increase.
The top reason is the incredible power demands of the computer arrays used for generative artificial intelligence. The Phoenix area has the second-biggest concentration of data centers in the country, after northern Virginia.
There are 85 data centers in the Phoenix area, eight in the Tucson area and one in Nogales, according to mapping by Iron Mountain Data Centers. The growth is ongoing: Just last week, Amazon bought 220 acres in Laveen for a data-center campus.
Tucson Electric Power hinted in a recent statement that much more is to come in Southern Arizona: “We’ve since engaged in preliminary discussions of potential projects that could boost local energy demand by more than 50 percent over the next decade.”
Water-consuming, carbon-producing
As these data centers multiply to meet the needs of artificial intelligence, they will demand so much energy that OpenAI founder Sam Altman said earlier this year, “There’s no way to get there without a breakthrough.”
Of course, Altman is playing all sides of this issue. While his company OpenAI is one of those creating the extreme demands for power, he’s also investing in possible solutions, funding three energy companies developing nuclear, solar and fusion technologies.
That’s good, but my worry is where we, the general public, come in. For one thing, the increasing demands bring increased pressure to either extend the life of old fossil-fuel burning generators, or to build new ones. It’s shocking, but our utilities are still building new natural-gas plants to meet increased demand now, and still burning coal in old ones, even as increased carbon dioxide in the atmosphere drives record heat waves.
For another, some of the data centers use a lot of water that is increasingly scarce in Arizona. As Sarah Porter, Director of the Kyl Center for Water Policy, pointed out to me, citing another person’s research: In Arizona, each demand for an answer from a generative AI tool like ChatGPT consumes 2 1/4 tablespoons of water for cooling the centers.
For a third thing, when there is accelerating demand and insufficient supply, prices will tend to rise.
UA law Prof. Barak Orbach and his son Eli Orbach made this point in a recent analysis published by the University of Arizona. It’s titled, “The US Is Not Prepared for the AI Electricity Demand Shock.”
“The most immediate effect of the demand surge will be increases in electricity costs, which will be felt mainly by those connected to power grids serving clusters of AI data centers,” they write. “Over time, this could create inflationary pressures.”
In a later conversation, Orbach acknowledged that AI companies are likely in a speculative bubble right now, but in the long run the winners of this capital-intensive competition will thrive. So Arizona ought to boost supply to meet the demand.
“Arizona specifically is the land of opportunities for power plants and data centers,” he said. “How many other states have inexpensive land and don’t have natural disasters?”
Tax incentives for data centers
In fact, bizarrely to me, Arizona has a tax incentive for data centers to locate here. We allow new data centers of substantial size to get a rebate of the sales taxes on purchases of computer-data center equipment.
It’s strange because, although the construction of these centers can bring economic benefit, the jobs they create tend to be minimal. They are simply massive banks of computers that mostly work on their own. Not to mention: These extraordinarily well-funded companies can easily afford to pay their own way.
Nevertheless, the tax rebate is good through the year 2033, thanks to a 10-year extension of the 2013 law signed by Gov. Doug Ducey in 2021.
So, as a state, we are incentivizing data centers to locate here that are hosting technology that will have unknown impacts on society, that draw significant water, that are likely to strain our utility grid and potentially drive up prices, and that do not employ many people.
Great deal — for them. It reminds me a bit of the extractive economies of the developing world, except here Silicon Valley is the First World country, and we’re the Third World country, having the terms of our participation in the global economy dictated to us.
An op-ed writer in the Star put it this way Sept. 30: “The copper we once pulled from the earth powered an industrial revolution. The data we now store will power a digital one.”
That’s the optimistic view. Of course, Altman himself implored the federal government to regulate artificial intelligence last year, saying “I think if this technology goes wrong, it can go quite wrong.” This might have been part publicity ploy, but there are real dangers, as witnessed by the increasing prevalence of deep fakes.
New nuclear plants possible
I spoke to the two candidates for Arizona Corporation Commission who are from Tucson about this. Incumbent Republican Lea Marquez Peterson noted that there’s a lot of conversation around the Big Tech companies building small modular nuclear plants as part of the solution.
“Growth should pay for growth,” she said. “ We haven’t figured out how to provide the energy resources that the data centers require. But there are a lot of conversations with Google, with Microsoft.”
She and Democratic challenger Joshua Polacheck both noted that companies are making their own deals to buy renewable energy. Meta has made a deal with Danish firm Orsted to build a new solar plant near Coolidge, for example.
“The data centers are basically a parallel power generation system,” Polacheck said. “It drives up the price because the … capacity for building solar plants and storage is going to these large industrial customers who can pay cash up front.”
The utilities cannot be expected to resist the call to produce more energy and make more money. It’s in their financial interest.
So, it will be up to average Arizona residents, through whoever is elected to the Corporation Commission, to make sure they serve our interests, not those of an industry that wishes to be seen as inevitable.
