Seattle AI data center boom could strain power supply, raise rates

Seattle residents could soon feel the effects of artificial intelligence in their electricity bills, as multiple companies explore building large-scale data centers that would dramatically increase the city’s power demand.

Four companies originally approached Seattle City Light about developing five data centers with a combined potential demand of about 370 megawatts, which would roughly consume one-third of the city’s average daily electricity use. However, this week, one of those companies canceled its plans, leaving three companies seeking to build four data centers.

Strong told KIRO Newsradio the companies include Prologis, a real estate investment trust headquartered in San Francisco, California that invests in logistics facilities; Equinix, an American multinational internet and data center company headquartered in Redwood City, California; and Sabey, a company headquartered in nearby Tukwila engaged in the development, ownership, and operation of multi-tenant data centers.

Strong said all three are interested in potential development in the southernmost part of Seattle City Light’s territory and could be working with big tech companies.

“It was not Microsoft,” Andy Strong, an executive with Seattle City Light, explained. “That’s not to say that maybe the entity might have been working with Microsoft. I just have no knowledge.”

The projects remain in early stages, with developers currently undergoing a “cluster study”. “It is an engineering planning exercise to help these organizations understand how we might feed them with the electrical energy that they might need, and a very rough idea on what it would cost them to do so,” Strong said. “The designs are very preliminary, very speculative at this point, but it is designed to give them some idea if they might want to move forward or not, depending upon infrastructure costs.”

City Light is also preparing for the possibility of unprecedented demand from a movement in many cities for more electrification – a process of converting systems, devices, or sectors from non-electric sources of energy to electricity. Strong said the scale of the proposed facilities could challenge the utility’s ability to reliably serve existing customers if not carefully managed.

“The city of Seattle, and it’s true of any utility in the country right now, is looking at electrification pushes from EVs to just flat-out building electrification, expansion of universities. Large entities like the Port of Seattle are looking to electrify,” Strong said. “So, most utilities across the country are looking at additional power growth within their systems.”

The addition of data centers will push electrification efforts into new areas for City Light

While Seattle already hosts about 30 data centers, most are relatively small. The four proposed facilities would be the first of their kind on a larger scale.

“It’s speculative to know how much of a load these additional data centers will bring, but it is part of our integrated resource planning … looking at potential future markets and growth and electrification,” Strong said. “We actively reach out and work with other entities like EPRI (the Electric Power Research Institute) to look ahead and try to forecast what the future looks like.”

The concerns for many towns and cities where data centers are built range from potentially soaring energy costs and electricity rates to overusage of water supplies and job availability for the local workforce.

Strong said City Light has a draft large-load policy that’s being reviewed with Mayor Katie Wilson, who is addressing rate-increase concerns.

“It is in our interest to promote a policy that will protect our existing rate players,” Strong said. “It’s going to take some time to review with the mayor’s office all options that we have to protect our rate payers and then the utility in general from some of these potential large loads.”

Meanwhile, big tech is pushing the AI pedal to the floor, where it appears it will remain for the foreseeable future. In a recent letter to shareholders, Amazon CEO Andy Jassy said Amazon Web Services (AWS) expects to spend about $200 billion this year, largely on AI-related investments.

Microsoft President Brad Smith recently laid out a five-point plan to help ensure new AI‑powered data centers are built and operated in ways that benefit local communities while minimizing burdens such as higher electricity rates and reduced water supplies, and by training students and local workers to meet the growing demand for AI-related jobs.

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