Data centers are putting new strain on California’s grid. A new report estimates the effects

California is a major hub for data centers — the facilities that store and transmit much of the internet. But just how much these power-hungry operations affect the state’s energy use, climate and public health remains an open question for researchers.

A new report released this week by the environmental think tank Next 10 and a UC Riverside researcher attempts to quantify that impact — but its authors say the report is only an estimate without harder data from the centers themselves.

“We are just making these reports pretty much in the dark — since there's almost zero information,” said Shaolei Ren, an AI researcher at UC Riverside and co-author of the report. “We have extremely little information about data centers in California.”

Ren and his coauthors conclude that between 2019 and 2023, electricity use and carbon emissions by California data centers nearly doubled, while on-site water consumption slightly more than doubled. Much of the increases were attributable to the electricity required to run artificial intelligence computations. But many of the report’s estimates, including its health impacts, are based on limited data — a key issue researchers said they encountered repeatedly when crafting the report.

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The report underscores a growing tension in the industry: advocates who support clean energy and experts who study energy demand agree the days of steady, flat energy use at data centers are over, but there’s far less consensus on just how sharply electricity demand will climb.

“In very simple terms, a lot of the uncertainty comes from: what is our life going to look like with AI in the next five years, 10 years, 20 years — how integrated is it going to become?” said Maia Leroy, a Sacramento-based advocate who focuses on clean energy and the grid. “Are we reaching a point where the use is going to plateau, or is it going to continue?”

Experts say more transparency is essential to better understand what resources data centers demand in California.

Liang Min, who manages the Bits and Watts Initiative at Stanford University, says the state should improve its forecasts for energy demand to support clean energy goals. Min, who investigates AI’s growing strain on the electric grid, told CalMatters that demand at power centers rises in rapid, unpredictable phases and can shift quickly with each new generation of hardware.

The California Energy Commission, which plans for energy use and the growth in demand, “can play a pivotal role,” in understanding and adapting to the demands of AI.

As demand grows, policy responses lag

In Sacramento, efforts to add transparency and guardrails around data centers have struggled this year. California lawmakers shelved most consumer and environmental proposals aimed at data centers, even as they approved a plan to regionalize California’s power grid to help meet demand from the sector. They set aside two bills focused on curbing data centers’ energy use — one requiring operators to disclose their electricity use and another that offered clean power incentives.

Gov. Gavin Newsom vetoed a separate proposal that would have required data center operators to report their water use, even after the bill was weakened. In the end, Newsom — who has often highlighted California’s dominance in the artificial intelligence sector — signed only one measure, allowing regulators to determine whether data centers are driving up costs.

Mark Toney, who leads The Utility Reform Network and supported the transparency measure, has questioned whether data centers justify the costs they’re pushing onto ratepayers.

He warned of the centers’ “voracious consumption of energy and water, increased carbon emissions, and jacking up ratepayer bills.”

Hard facts about data centers are tough to find in California because most rent out power, cooling and floor space to other companies, said Ren, the UC Riverside researcher. Such colocation facilities don't run their own servers or technology, so they report less information publicly than data centers built by major tech companies in other states.

While estimates vary, California has the third-most data centers in the country, after Texas and Virginia. DataCenterMap, a commercial directory that tracks data centers worldwide, lists 321 sites across the state. More in California are expected in coming years.

The centers operate around the clock and often rely on diesel backup generators to maintain service during power failures — a practice that adds both greenhouse gases and local air pollutants. They also consume energy and water depending on their cooling methods.

Rising data-center demand, and rising questions

F. Noel Perry, the businessman and philanthropist who founded Next 10, said his organization's report shines light on what is fundamentally a black box. “To solve a problem, we have to understand what the problem is,” he said.

“We've seen the proliferation of data centers in California, in the U.S. and across the world — and we also are seeing major implications for the environment,” Perry told CalMatters. “The real issue has to do with transparency — and the ability of elected officials and regulators to create some rules that will govern reductions in emissions, water consumption.”

The report estimated that data centers used 10.8 terawatt-hours of electricity in 2023, up from 5.5 terawatt-hours in 2019, accounting for 6% of the nation’s total data center energy use. Unless growth is curbed or better managed, the report’s authors project demand could rise to as high as 25 terawatt-hours by 2028, equal to the power use of roughly 2.4 million U.S. homes.

Carbon emissions from the sector nearly doubled during the same period, climbing from 1.2 million to 2.4 million tons, researchers estimated, while on site water use grew from 1,078 acre feet in 2019 to 2,302 acre feet in 2023. That’s enough to meet the annual water needs of almost seven thousand California households.

The report’s authors also estimated the public health costs from air pollution associated with data centers have potentially risen, from $45 million in 2019 to more than $155 million in 2023, with the burden expected to reach as high as $266 million by 2028.

Most of those costs stem from indirect pollution produced by fossil-fueled power plants that supply the grid. But authors pointed out that regions dense with data centers — particularly Santa Clara County, home to Silicon Valley — could face higher localized risks from diesel backup generators.

Dan Diorio, vice president of state policy for the Data Center Coalition, said the report exaggerates the impact of backup diesel generators, which are tightly regulated and rarely used in California, minimizing their contributions to air pollution. Data centers don’t control the water used in electricity generation, said Diorio. Since those water impacts don’t happen on site, it’s not fair to blame that on the centers themselves.

“It paints a skewed picture of this critical 21st-century industry,” Diorio said in a statement.

Diorio said the report also overlooks how cooling technology varies by region and has become more efficient in recent years.

But the authors say their findings underscore the need for uniform reporting standards for data centers’ energy and water use. The report said California should establish ongoing local monitoring and review of data centers — and make the findings public.

Ren, the UC Riverside researcher, said that California’s cleaner grid and stricter pollution rules are helping blunt some environmental impacts of data centers already.

“California — versus the national average — is doing a better job due to the cleaner grid,” he said.

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.