The grid has been under stress from AI data centers, as is well known. However, because of the high cost of land and electricity, which have forced hyperscaler enterprises abroad, Silicon Valley has been mostly shielded from it all.
However, the power crisis may soon be felt by the tech elite. Lake Tahoe, a popular vacation spot in the Bay Area, has less than a year to find a new energy provider.
The contract between Liberty Utilities and NV Energy will expire in May 2027. Power from NV Energy will be diverted to other parts of Nevada, where data centers have been expanding.
Data centers are not to blame, according to NV Energy and Liberty Utilities, who both stated that the winddown was long planned. However, it’s difficult to understand how they don’t contribute. According to a Bloomberg study, NV Energy alone has requests for over 22 gigawatts of demand, which is more than 40 times what Lake Tahoe uses at its busiest.
It’s easy to imagine a scenario where Liberty Utilities and NV Energy renew their deal if data centers weren’t involved. However, it was inevitable that Lake Tahoe’s traditional customers would be left out in the cold since data center clients were prepared to spend whatever it took to obtain power.
The timing couldn’t be worse. The Trump administration’s choice to attack Iran has exacerbated the already difficult conditions in the energy markets, which are pressured by increased demand and limited supply.
The fact that Lake Tahoe’s electricity cables have more links with Nevada’s grid than California’s exacerbates the situation. This implies that the neighborhood needs to look for another power supplier in the West or within NV Energy’s service area.
Residents of Lake Tahoe and owners of second homes will probably need to look for another regional power provider because NV Energy has already given data centers priority over the mountain town.
It won’t be simple either. A county board in Utah recently approved a 40,000-acre data center project that, when finished, could use up to 9 gigawatts of electricity. Approximately 4 gigawatts are currently used throughout the entire state of Utah. At that level of demand, price increases across the region are nearly a given.
Lake Tahoe will probably pay more for power next year than it does now due to the combination of those factors. Locals will be the most severely impacted, but many Silicon Valley residents who own second homes in the region may also feel the strain.
The individuals who are most affected by the AI energy crisis have had very little influence on the technology or its implementation, which is an injustice. The power situation in Lake Tahoe indicates that this is beginning to change, but probably not much.