Is it possible to have both data centers and affordable utilities? How can we meet the need for more power in ways that are healthful for us tomorrow and today? What are the strategically relevant parameters we need to distribute financial burdens in ways that are fair for all?
These were three of the topics discussed at the Pitt Business Executive Roundtable: Energy, AI, and Affordability, hosted by the Center for Sustainable Business at University of Pittsburgh School of Business. Leaders from utility companies, for-profits, social-profits, government, and consumer advocates joined together to discuss these, and other, tough questions.
Bringing together energy users, movers, and producers meant the participants looked at each issue from various viewpoints. Mark Kempic, president, Columbia Gas of Pennsylvania and Maryland, thought this was valuable.
“For me, it’s always important to meet with people you agree with and people you disagree with,” said Kempic. “I really like talking with people who have different ideas.”
Public Sentiment
The roundtable participants talked about the strong feelings residents have when they hear a data center is under consideration in their community. One of the executives in the room stated that the public sentiment has shifted from “not in my backyard” (NIMBY) to “build absolutely nothing anywhere near anyone” (BANANA), which makes it hard to address the growing need for power.
Developers highlight tax revenue and job creation from data centers, yet towns often give tax breaks, which offsets the revenue gain, and the jobs are temporary. Residents are concerned about the strain on the local water and power, and quality of life issues such as light pollution, and the constant humming noise from the fans and generators. There is also the issue of cost.
Affordability and The Energy Burden
One of the roundtable participants asked, “how can we ensure that local economic development, like data centers, doesn’t push the financial burden past the tipping point where residents can no longer afford basic utilities?”
Decades ago, people were willing to pay for basic lighting because they realized the value of having consistent electricity instead of shoveling coal into a boiler in the middle of the night. Now that 99.9 percent of electric reliability is the norm, electricity is taken for granted. Some of the leaders feel this has resulted in consumers with a low tolerance for price increases.
However, as the costs of other necessities—rent/mortgage, food, transportation—continue to rise, others at the roundtable said it is important to consider what a consumer is able to pay, instead of what they are willing to pay.
A representative from a utility company said affordability should be part of a three-legged stool; affordability, reliability, and safety are equally important.
Other parameters needed to meet the moment include a clear priority hierarchy between safety, reliability, and affordability. Additionally, it requires public trust and strong governance—focusing on human well-being and clarity for decision-makers. Finally, the relationship between value and cost must be defined, addressing how created value is distributed among its enablers, who pays for what, who receives exemptions, and the financial cost of rapid deployment.
Current Market Environment
A participant in the roundtable used the acronym VUCA—volatility, uncertainty, complexity, and ambiguity—to describe the current market environment.
AI is driving a rapid, unpredictable spike in energy demands, yet we don’t know yet if this is a boom or a permanent shift. Decisions must take into consideration conflicting sides – the additional deployment opportunities AI could enable that bring down energy rates; however, the data centers the run on create issues with noise as well as water and electric supplies. These conflicted stakeholder interests make taming the disruption of AI more challenging, particularly when entangled with the other “Wicked Problems” facing the market (see interactive visual below).
About the Executive Roundtable Series
This is the third in the series of Executive Roundtables Pitt Business is offering to provide actionable insights between academia, industry, civic leadership, and policy experts.
“I think the University of Pittsburgh is doing a great job in thinking through who are all the players in this ecosystem that are needed to come together in conversation and align on key issues so we can move forward together,” says Michelle Buczkowski, chief administration officer, EOS Energy Enterprises “Energy does not happen in a vacuum; it requires people and policies from different directions to come together for a common cause.”
For more information on the business model parameters surfaced as part of this conversation, contact the Center for Sustainable Business at csb@katz.pitt.edu. To learn more about future Executive Roundtables, contact our Office of Strategic Partnerships at partners@business.pitt.edu.