Meta Data Center: Louisiana Grid Impact?

Entergy's strategy to provide power for Meta's large data center in Louisiana is being viewed differently by opposing sides. Advocacy groups are concerned about potential outages, while company officials state that precautions will be implemented. The utility is seeking approval from state regulators to construct three gas-fired power plants, costing $3.2 billion, along with transmission infrastructure for a facility in Richland Parish.

This data center would assist Meta (Facebook, Instagram, and Whatsapp's parent company) in developing its AI technology to compete with companies like Google and OpenAI. Powering the data center would require over twice the peak summer demand for New Orleans.

The Alliance for Affordable Energy and the Union of Concerned Scientists, both consumer advocacy and environmental nonprofits, have urged the Louisiana Public Service Commission to reject Entergy’s request unless more safeguards are implemented. According to Logan Burke, the executive director of the Alliance for Affordable Energy, investments in Louisiana should benefit local communities and not burden ratepayers across the state. Burke says that Entergy has provided no such assurances.

Entergy disagrees with these arguments, emphasizing that the project will benefit all customers, not just Meta. Laura Beauchamp, vice president of business operations and strategy at Entergy, said that this was a complicated contract, but the goal was to ensure significant benefits for their customers.

Earthwork is underway at the future site of Meta’s data center in Richland Parish. Testimony was filed by opposing groups in April, and Entergy filed rebuttal arguments last week. The parties are expected to negotiate their positions with commission staff. Utility regulators are expected to make a ruling on the proposal later this year.

Key details of the case are not public due to nondisclosure agreements. The full capital investment, the data center's expected power demands, and agreement details with Meta have been redacted from public documents.

State officials consider Meta’s $10 billion project an economic win for one of the state's poorest regions. The company announced plans in December to construct the site on agricultural land. The project is expected to support 300-500 permanent jobs and 5,000 construction jobs at its peak. It is unclear whether these jobs will go to local residents.

A consultant supporting the nonprofits suggests that the data center's power demands could destabilize the grid. This could be problematic for Louisianans, who already pay high electricity bills and rely on an unreliable grid. A report stated that over Memorial Day weekend, many people in New Orleans lost power due to forced outages triggered by grid problems.

Nicholas Miller, a consultant supporting the nonprofits, argues that Entergy’s proposal may underestimate the amount of transmission needed and has not adequately evaluated potential risks. Miller said that North Louisiana businesses and residents could face major disruptions to their electric service if load fluctuation problems are not addressed.

As data centers use more power, grid operators are trying to avoid blackouts. Entergy states that it has completed modeling to address these concerns. Daniel Kline, an Entergy employee, stated that the utility proposal accounts for system risks. Beauchamp noted that the regional grid operator will study the new resources.

Entergy maintains that regular customers will not pay for Meta’s energy needs, stating that Meta is paying for the full annual revenue of the natural gas-fired plants for 15 years and will contribute a large percentage of the costs that would otherwise be borne by Entergy's customers.

Advocacy groups question what will happen if Meta leaves after 15 years, since the life of a plant can exceed 30 years. The nonprofits want Meta’s contract with Entergy extended to 25 years. The utility says that even if Meta leaves after 15 years, the plants will still be needed. Beauchamp said that the 15-year deal could not be renegotiated and that they can’t dictate to a customer how they do business.

The advocacy groups are concerned about potential cost increases for ratepayers, such as those related to a $550 million new transmission line and fuel costs. Beauchamp said that Meta is expected to pay for the new infrastructure.