It’s no secret that AI data centers put a strain on the network. But Silicon Valley has been relatively insulated from all of this, thanks to high land and energy prices that have pushed hyperscale projects elsewhere.
However, the tech elite may soon get a taste of the power crisis. Bay Area vacation spot Lake Tahoe has less than a year to find a new energy supplier.
By May 2027, Liberty Utilities’ agreement with NV Energy will expire. NV Energy’s power will be redirected elsewhere in Nevada, where data centers have boomed.
Both Liberty Utilities and NV Energy said the shutdown was long planned, and NV Energy said the data centers were not to blame. But it’s hard to see how they don’t play a role. Only NV Energy has requests for more than 22 gigawatts of load, which as a Bloomberg report points out, that’s more than 40 times what Lake Tahoe uses at its peak.
If data centers didn’t exist, it’s easy to see a world in which Liberty Utilities and NV Energy renew their contract. But with data center customers willing to pay whatever it takes to get electricity, it was inevitable that traditional customers in Lake Tahoe would be left out in the cold.
The timing couldn’t be worse. Energy markets are a tough environment these days, squeezed by rising demand and tight supplies exacerbated by the Trump administration’s decision to attack Iran.
Lake Tahoe’s conditions are exacerbated by the fact that its power lines share more connections with Nevada’s grid than California’s. This means the community must find another energy provider from NV Energy’s territory or elsewhere in the West.
Since NV Energy has already prioritized data centers over the mountain city, it’s likely that Lake Tahoe residents — and second-home owners — will have to find another regional power producer.
This won’t be easy either. In one state, Utah, a county commission recently approved a 40,000-acre data center development that could consume up to 9 gigawatts of electricity when completed. Today, the entire state of Utah uses it about 4 gigawatts. Demand on this scale is almost certain to drive up prices across the region.
The confluence of these factors means Lake Tahoe will likely pay more for electricity next year than it does today. Locals will be hit the hardest, but people with second homes in the area, many of whom are from Silicon Valley, may also feel the pinch.
The injustice of the AI energy crisis is that the people who suffer the most have had very little say in the technology or its evolution. The plight of Lake Tahoe shows that this is starting to change, though probably not enough to make a difference.
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