Data centers continue to be a hot topic in Missouri. In a recently signed executive order, the governor laid out a plan to formulate a pro-business and pro-consumer framework for data centers supporting artificial intelligence. In addition, the order called for the investigation and review of energy regulations and infrastructure planning due to growing demand.
The investigation and review are intended to protect ratepayers, assess Missouri’s future energy needs, and manage Missouri’s natural resources effectively. These are good objectives, but the hard question is finding a policy solution to match all those goals.
One option I have written about, consumer-regulated electricity (CRE), is worth considering. (If you’re unfamiliar with CRE, you can click the link to learn more.)
Instead of placing new data centers on the existing regulated grid, we could match data centers with an independent CRE utility (CREU). Furthermore, if electricity demand for these data centers falls short of its sky-high projections, then the excess capacity will have been a poor investment. This protects ratepayers by putting private companies on the hook for that risk instead.
There are benefits to data center developers as well. A CREU can be structured around the developer’s reliability needs and preferred energy resources. Projects could also require less transmission, as new generation facilities could be built near their customer base. CRE could be a reliable, economical, and sustainable energy solution to meet current and future energy needs.
Speed to operation is vital in today’s economy, and data center projects have experienced difficulties securing permissions from the various layers of government. While many hurdles would still remain (like local zoning), CRE projects would not require permissions from the Missouri Public Service Commission since they would not be connected to the regulated grid. At the federal level, Senator Tom Cotton recently introduced the DATA Act, which would exempt CREUs from federal regulations not designed for on-site, self-contained power systems. While still early, this legislation is worth monitoring and could further increase the speed to operation.
The governor has made it clear that he wants to meet growing energy demand in a way that protects ratepayers and addresses Missouri’s current and future energy needs. CRE is a policy approach that matches those objectives.
