Paul Arbaje, an energy analyst at UCS, is the author of the new report on Louisiana data centers.
The prospect of Louisiana becoming home to multiple artificial intelligence data centers could increase the state’s wholesale electricity costs by up to $26 billion and lead to health and climate damage amounting to nearly $90 billion, a new study says.
The study released this week by the Union of Concerned Scientists (UCS) describes those billions in potential costs related to the construction of AI data centers as likely if state decisionmakers continue on a path of fossil-fuel dependence and failures in protecting residents against rising utility bills.
“A poorly managed data center boom severely jeopardizes Louisiana’s affordable, reliable, clean-energy future,” Paul Arbaje, report’s lead author, said in a prepared statement.
The analysis expects the state to remain dependent on a single fossil fuel – natural gas – through 2041, when natural gas is expected to make up two-thirds of Louisiana’s electricity generation. Under current policies, Louisiana would meet the increased electricity demands from data centers – including projects planned by Amazon, Meta and Hut 8 – through gas-fired power, according to the study.
In a statement emailed to the Louisiana Record, Louisiana Economic Development (LED) said that while it had not fully reviewed the report, the UCS projections seem significantly inflated and are not in sync with how the data centers are being evaluated..
“Every LED project undergoes detailed economic modeling, along with rigorous environmental permitting, utility planning and regulatory review to ensure it can be supported without impacting the environment, existing customers or the electric grid,” the LED statement says. “In addition, data center operators are required to pay for the energy and infrastructure they use – protecting ratepayers and, in some cases, delivering long-term savings.”
The data center projects will bring investment and jobs to Louisiana, according to LED, and state officials will work to ensure such development will come to pass with Louisiana communities, not to them.
The report urges Louisiana decisionmakers to consider powering data centers on a flexible schedule, avoiding high electricity demand times, and to add more renewables into the state’s energy-generation mix, such as wind, solar and battery storage.
UCS also criticizes the Louisiana Public Service Commission (LPSC), saying the panel is not equipped to protect ratepayers from higher costs due to demands from future data centers and the volatile nature of fossil-fuel prices.
“Absent action by state policymakers, residents could be responsible for substantial portions of these costs to power data centers,” the study’s executive summary states.
“Transparency, robust community engagement and a diverse electricity mix will help shield people from toxic, unreliable fossil fuels and soaring energy costs as data centers continue to come to the Bayou State,” Arbaje said.
The data centers’ power demands could lead to worsening pollution from fossil-fuel burning, leading to increased harm to public health and climate-related damage related to warming temperatures and higher sea levels along the coast, according to the study.
In addition, the new data center projects in Louisiana could account for 87% of the state’s growth in electricity demand by 2030, the UCS reports.
“Under such a scenario, those new city-sized demands on the power grid would raise the state’s wholesale electricity system costs by an estimated $26 billion over the next 15 years,” the UCS said in a news release.
Louisiana needs to improve its long-term planning for its electricity infrastructure, the report says, and the LPSC needs to make the planning process more transparent while holding utilities accountable. Tech companies should also be required to pay for the capital and operating costs to meet the electricity requirements of the data centers, according to the report.
