It’s no secret that AI data centers are straining the power grid. But Silicon Valley is relatively isolated from all that, thanks to soaring land and power prices that have pushed hyperscaler projects elsewhere.
But the tech elite may soon experience a power crisis. It takes Lake Tahoe, a Bay Area vacation destination, less than a year to find a new energy supplier.
Liberty Utilities’ contract with NV Energy ends in May 2027. NV Energy’s power will be redirected to other parts of Nevada where data centers are booming.
Both Liberty Utilities and NV Energy said the downsizing had been long planned. And NV Energy said the data center was not to blame. But it’s hard to see how they don’t play a role. NV Energy alone has a load request of more than 22 gigawatts, which is more than 40 times what Lake Tahoe uses at its peak, as the Bloomberg report notes.
It’s easy to imagine a world in which Liberty Utilities and NV Energy renew their contracts if their data centers aren’t working. But data center customers are willing to pay whatever it takes to get electricity, so it was inevitable that Lake Tahoe’s traditional customers would be left out in the cold.
The timing couldn’t be worse. The current energy market is in a difficult environment, weighed down by surging demand and tight supply conditions that have been exacerbated by the Trump administration’s decision to attack Iran.
Lake Tahoe’s situation is further complicated by the fact that its power lines share more connections with Nevada’s power grid than California’s. That means communities will have to find another power provider, either within NV Energy’s territory or elsewhere in the West.
Given that NV Energy is already prioritizing data centers over mountain towns, Lake Tahoe residents and second-home owners will likely have to find another regional power company.
It won’t be easy either. In one state, Utah, county commissioners recently approved a 40,000-acre data center development that could consume up to 9 gigawatts of electricity when completed. Currently, the entire state of Utah uses about 4 gigawatts. Demand of this magnitude is almost certain to drive up prices across the region.
These factors combine to mean that electricity bills in Lake Tahoe will likely be higher next year than they are today. Local residents will be hit hardest, but people who own vacation homes in the area, many of them from Silicon Valley, may also feel the pinch.
The unfairness of the AI energy crisis is that those who suffer the most have little say in the technology and its deployment. Lake Tahoe’s power situation shows that things are starting to change, but perhaps not enough to make a difference.
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