* Data centers urged to reduce power use during peak

demand

* US electricity use from data centers could quadruple by

decade's end, study says

* Big Tech is beginning to test how it can shrink data

center power demand when grid demand peaks

By Laila Kearney

NEW YORK, March 26 (Reuters) - The U.S. technology

industry is being pushed to shrink its power use in times of

high demand, amid growing public concern that Big Tech's massive

electricity needs for its expansion of data centers are maxing

out the country's grid.

The power industry and its regulators are increasingly

urging tech companies to make what was once an unthinkable

concession - scaling back energy consumption at the giant server

farms known as data centers when called upon by utilities and

grid operators.

Attempts to make data centers more flexible are largely in

pilot mode. The process is complex and the financial incentives

for data centers to stay on around the clock are immense. IT

consultant Heunets estimates when data centers are down, it

costs technology companies about $9,000 a minute.

But the point is to avoid blackouts and surging power bills on

the days and hours of the year when demand on the grid is

peaking. For Silicon Valley, increased flexibility that could

help avert potential crises may help tech companies win

agreements to connect their new data centers faster.

Electricity use from data centers could more than quadruple by

the end of the decade to consume as much as 17% of U.S. power

supplies, according to a recent study by the Electric Power

Research Institute, EPRI.

"It's not electrons on the grid - it's being able to deliver

when demand is at a peak," U.S. Energy Secretary Chris Wright

said at the CERAWeek conference in Houston this week. "When

electricity demand rises high, supply must meet demand, or

people die."

During a storm this winter, the Department of Energy told

data centers in the country's largest regional electric grid -

PJM Interconnection - to run on their backup generators to free

up power on the grid.

PJM, which covers the biggest data center market in the

world, is projecting supply shortages as early as next year if

demand continues to outstrip new supply.

"Finding a way to manage this in a flexible way is how we

are going to get through this as an industry," said Stu Bresler,

chief operating officer of PJM Interconnection.

Taking action when local grids are maxed out could save $40

billion to $150 billion in capital investments over the next

decade, ultimately saving households and small businesses from

taking on more costs of the grid build-out for data centers,

according to research released last week by Duke University's

Nicholas Institute for Energy, Environment & Sustainability.

To ease concerns about rising costs and power outages, data

center investors and energy suppliers say the massive server

warehouses will need to show that they can pull back on their

energy use when utilities or grid operators ask them to, an

electric industry practice known as "demand response."

"Demand response has to be part of the solution," said Matt

O'Connor, Chief Investment Officer of International Energy at

Carlyle, which develops and invests in data centers.

"I think we will see, and what we're starting to see now, is

that real heavy end-users are going to start to be able to

figure that out and model that into how the data centers

operate," he said.

TRANSITION PERIOD

Data centers, historically, have not taken part in demand

response. Traditional cloud data centers that store data at a

single site must have a constant and consistent energy source or

data could be compromised, according to industry sources. Data

centers being built today to develop artificial intelligence may

be more flexible, allowing energy-intensive large language model

training work at some sites to be shifted across locations.

Technology companies are beginning to commit to shifting

data center workloads - pushing energy-intensive processing to

other facilities - or switching to backup power rather than

drawing from the grid during peak periods.

Google recently announced contracts with several

utilities to lower consumption at certain data centers when

called upon. Nvidia ( NVDA ) announced an initiative this week

with Emerald AI to control and relocate power consumption from

server warehouses when grid demand spikes.

Also this week, EPRI released a framework with the input of

dozens of power and technology companies, including Meta

, laying out how data centers can become more flexible.

The hope, it said, is that the effort will speed up the time it

takes to connect data centers.

Owners are increasingly asking how they can make their data

centers more flexible, said Jennifer Cahill, an associate vice

president at engineering and building firm Black & Veatch, whose

customers include utilities and technology companies.

"You're seeing a transition period where everybody would

like to do it, and we're working through how it can be done,"

Cahill said.