Silicon Valley resorts need a new energy provider as AI drives up prices

It’s no secret that AI data has been disrupting the grid. But Silicon Valley has been immune to all of this, thanks to the high cost of land and energy that has caused hyperscaler projects to go elsewhere.

However, technologists can get a taste of the power. Bay Area resort Lake Tahoe has less than a year to find a new power supplier.

By May 2027, Liberty Utilities’ contract with NV Energy will expire. NV Energy’s power will be transferred elsewhere in Nevada, where data centers have been expanding.

Both Liberty Utilities and NV Energy have said that the storm was already planned; and NV Energy said the data center was not responsible. But it’s hard to see how he doesn’t play. NV Energy alone has requests for more than 22 gigawatts of goods, which if a A Bloomberg report shows, it is 40 times what Lake Tahoe uses at its peak.

If the data center isn’t played out, it’s easy to see the world where Liberty Utilities and NV Energy are renewing their contract. But with data center customers willing to pay whatever it takes to get electricity, it was inevitable that Lake Tahoe customers would be left out in the cold.

The timing couldn’t be worse. Energy markets are a tough place today, squeezed by growing demand and tightening conditions that were exacerbated by the Trump administration’s decision to attack Iran.

The situation in Lake Tahoe is exacerbated because its power lines share more with Nevada’s grid than with California’s. This means that the community must find an energy supplier from the NV Energy region or elsewhere in the West.

With NV Energy already installing a data center in the mountain town, it’s possible that Lake Tahoe residents — and second-home owners — will find another generator in the region.

It won’t be easy anymore. One county in Utah, county commissioner recently approved a 40,000-acre data center development that could use up to 9 gigawatts of electricity when completed. Today, the entire state of Utah uses it about 4 gigawatts. Demand at that level is sure to raise prices across the region.

The combination of these factors means that Lake Tahoe will pay more for electricity next year than it does today. Local residents will be hit hard, but people who own second homes in the area, many of them in Silicon Valley, may also feel the pinch.

The unfairness of the AI ​​power crunch is that the people who suffer the most don’t have much of a say in the technology or its output. Lake Tahoe’s energy crisis shows that it’s starting to change, though not enough to change it.