ChatGPT is coming for Arizona's power grid

Artificial intelligence is having a moment — but it's going to need an astounding amount of energy to thrive.

Why it matters: Data center hubs like metro Phoenix are expected to grow in order to meet increased demand , and that could strain water resources and increase carbon dioxide emissions.

The big picture: Data centers are the physical buildings that house IT equipment for data storage and processing used by major technology companies.

• Phoenix — with its relatively low energy costs and low risk of natural disaster — has become a magnet for these facilities.
• It was the second largest growth market in the U.S., behind northern Virginia last year, with nearly 7 million square feet of inventory and another 5.5 million planned or under construction, according to commercial real estate firm JLL .

State of play: The share of electricity consumption by Arizona data centers could more than double by 2030, per a new report from the Electric Power Research Institute (EPRI).

• This would be largely attributable to expanding use of energy-hogging generative AI models , per EPRI.

Stunning stat: AI queries, like ChatGPT requests, are estimated to require 10 times the electricity of traditional Google queries, EPRI found.

By the numbers: Arizona data centers consumed nearly 7.5% of the state's electricity last year, but could drain 16.5% in 2030 in the highest growth scenario.

• Nationally, ERPI expects data centers to account for up to 9.1% of U.S. electricity by 2030.

The intrigue: It remains to be seen which balance of fuels — gas, renewables, coal, batteries, nuclear and more — will meet this added thirst.

• A new TD Cowen report projects most imminent data center growth will be supported by natural gas.

Threat level: Data centers are also notorious water guzzlers .

• Water is used to cool the building interiors, which are warmed by servers and other equipment.

Between the lines: The data center industry is investing in more sustainable alternatives to quell water and emissions concerns.

• They're introducing waterless cooling technology , water recycling and other conservation techniques .
• ERPI is working with industry groups to pursue backup generators powered by "clean fuels."

What we're watching: Some metro Phoenix cities are taking a step back from data center development.

• Mesa, which has permitted multiple facilities along its Elliot Road Tech Corridor , is no longer actively recruiting data centers, former economic development director Bill Jabjiniak told AZ Big Media last year.
• Data centers take up a lot of land but employ relatively few people, making them less valuable in the long term than manufacturing facilities that bring hundreds or thousands of high-wage jobs.

Yes, but: That hasn't stopped data centers from going up in other parts of the Valley.

• QTS is building an 85-acre campus at 40th Street and Loop 202 that will eventually have five buildings.
• And the company is proposing a 3 million-square-foot, 16-building campus in Glendale, the Phoenix Business Journal reported last month.