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Powering AI: The Energy (And Land) Behind Data Centers

In 2024, AI stocks, particularly Nvidia, have driven the stock market to all-time highs. Nvidia alone is responsible for an impressive 34.5% of the S&P 500's rise in 2024. As Nvidia’s chips power the data centers behind the AI revolution, it's crucial to examine how these data centers are powered. The AI revolution is also responsible for driving our power consumption to all-time highs. In this post, we look at the power demands of data centers and the land required to support those demands.


Energy Demand of a Data Center

For this article, we’re going to work with a hypothetical data center with 1,000 racks, each consuming 50 kW, operating continuously throughout the year. This data center will require approximately 438,000 megawatt-hours (MWh) of power per year. Many of these data centers are built or operated by technology companies that have pledged to be carbon-neutral. The plan for meeting these pledges is typically to use carbon offsets with renewable energy. With that in mind, let’s look at wind and solar land-use requirements vs. more conventional approaches like natural gas or nuclear.



Wind Power: A Renewable Solution

Utility-scale wind turbines are a viable renewable energy source for such data centers. Each turbine typically generates around 6,000 MWh annually. Given this output, approximately 73 wind turbines would be required to meet the data center’s energy needs. We’ll add a 20% contingency for when the wind isn’t blowing as hard as we would like and to allow for downtime which gives us a “farm” of 88 wind turbines.


Land Requirements

Wind turbines are spaced on average across 40 acres each to prevent turbulence and maximize efficiency. Out of these 40 acres, about 1-2 acres per turbine are occupied by the turbine's infrastructure, leaving the remaining land accessible.

For our hypothetical data center, this results in:

  • Total Land Required: 88 turbines * 40 acres/turbine = 3,520 acres

  • Accessible Land: 88 turbines* 38 acres/turbine = 3,344 acres


This accessible land can be utilized for various purposes such as farming, ranching, or recreational activities. Wind turbines are typically located in rural areas as the turbines are noisy, an eyesore, and land cost close to a town makes a wind turbine economically unviable. The intermittent nature of wind power requires additional measures because our hypothetical data center needs to be available as close to 100% of the time as possible. We will need batteries to store excess energy produced during windy periods and supply power during calm conditions like overnight or early morning/late evenings. As is the case with each power source we will look at in this article, we will also need a backup power system or access to backup power to ensure continuous operation regardless of weather conditions.


Solar Power: An Alternative Approach

Solar power is another viable option for powering data centers. For our hypothetical data center, we can calculate the land required based on the following assumptions:

  • Panel Capacity: Each panel has a capacity of 295 watts1

  • Sunlight Hours: On average, each panel receives 6 hours of sunlight daily. This helps us account for rainy days, cloudy days, etc.

  • Daily Energy Output: 295W * 6 hours/day = 1,770 Wh/day = 1.77 kWh/day

  • Annual Energy Output per Panel: 1.77 kWh/day * 365 days/year = 646.05 kWh/year

  • To generate 438,000 MWh (or 438,000,000 kWh) annually you need approx 678,092 panels. We’ll add the same 20% contingency to address issues like downtime and to ensure that we have sufficient capacity for a total of 813,710 panels.


Land Requirements for Solar Panels


The land required for solar panels depends on panel spacing and infrastructure. Typically, 1 MW of solar panels requires about 4-5 acres.2 Let's calculate the land needed:

  • Total Installed Capacity: 813,710 panels * 295 W/panel = 240,044,450 W = 240 MW

  • Land Required: 240 MW * 5 acres/MW = 1,200 acres

It's important to note that land used for solar farms is generally inaccessible for recreational, farming, or ranching use, though some activities like sheep grazing might still be possible.3


Natural Gas Power: A Conventional Solution

A typical combined cycle natural gas power plant can be 500 MW which is enough to power 10 of our hypothetical data centers.4 In the scenario, where our hypothetical data center is being powered by a natural gas power plant, the combined cycle natural gas power plant would be more efficient because the load is relatively stable.


Land Requirements for Natural Gas Plants


Natural gas power plants generally require 10 to 50 acres of land, depending on the plant's size and infrastructure needs. There will be additional land required for the natural gas well (typically 4-5 acres per well) and the pipeline used to transport the gas from the well to the plant.


Nuclear Power: A High-Energy Solution

Nuclear power plants are among the most efficient sources of electricity. A typical nuclear power plant can produce around 1 gigawatt of power (1,000 MW).5 This is enough to power 20 of our hypothetical data centers.


Land Requirements for Nuclear Plants


Nuclear power plants require significant space for the reactor, cooling systems, and safety zones, typically around 500 to 1,000 acres. Nuclear power plants also have very specific site criteria as their access to water for cooling and power generation is critical.


Conclusion

The drive towards AI and the rise of companies like Nvidia underscore the importance of reliable and sustainable energy solutions for data centers. Both wind and solar power offer viable solutions, each with distinct land and infrastructure requirements. However, conventional power sources like natural gas and nuclear power provide high-capacity alternatives on relatively smaller footprints. Nuclear also provides the benefit of being a carbon-free generation source with the drawback of catastrophic failure and multi-generational waste products.


Understanding the energy requirements and potential solutions for powering data centers allows us to appreciate the critical infrastructure behind AI advancements. By combining renewable energy sources, energy storage, and backup systems, we can sustainably and efficiently power the next generation of data centers.


Beyond water, land is one of our most precious resources, and using it wisely is crucial. The thousands of acres saved by adopting more land-efficient power sources can be repurposed for agriculture, housing, commercial, or industrial uses, benefiting both the economy and the environment.

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