Arkansas Faces Surge in Power Demand from AI & Data Centers

Arkansas Electric Cooperative Corp. is building a natural gas-fueled generation facility near Naples, Texas, to help meet growing demand for electricity. (Rendering provided)

Arkansas and national utility leaders are bracing for what might be called the great power surge of the 21st century.

Artificial intelligence hubs, giant data centers and other industries hungry for power threaten to drive up  heavy load demand over the next decade.

The surge will mean higher electricity bills, but Arkansas’ relatively affordable rates could make it a mecca for economic development, utilities argue.

They’re backing state legislation to finance new power plants in a strategy to compete for power-intensive projects like Elon Musk’s $6 billion xAI data center that’s coming to Memphis.

To woo these projects utilities are seeking clearance to pay for new power generation by collecting higher rates quicker, and with less immediate scrutiny by regulators.

Arkansas Electric Cooperative Corp. CEO Buddy Hasten calls Senate Bill 307 “large load economic development legislation.” But before touting the bill, Hasten assessed just how large the coming load might be.

“Is it really this tsunami of load growth?” he asked rhetorically.

“I can’t speak for the whole state, because cooperatives represent about one-third of the load … but just last week in cold weather, and not freakishly cold weather, we saw a peak load of 3,011 megawatts. So 3,000 megawatts is a good description of the size of our system. And I am currently evaluating about 4,000 megawatts of load requests in addition to that 3,000.”

Those requests are coming from industries shopping for power and considering putting operations in Arkansas, Hasten said.

“They’re economic development opportunities where people want to bring in manufacturing, data centers, lithium mining, you name it.”

Texas’ AI Rush

In a paper published by Grid Strategies in December, John D. Wilson, Zach Zimmerman and Rob Gramlich declared that a long era of flat power demand is over.

“The official nationwide forecast of electricity demand shot up from 2.8% growth over the next five years to 66 [gigawatts] through 2029 — but with an additional 61 [gigawatts] of growth in preliminary updates, nationwide electric demand is forecast to increase by 15.8% through 2029,” they wrote. “The main drivers are investment in data centers and manufacturing.” A gigawatt, generally speaking, is enough electricity to power 750,000 to 800,000 homes.

Artificial intelligence and data centers pushed up annual power demand nationwide last year by 3%, according to the North American Electric Reliability Corp. and the Edison Electric Institute, the Grid Strategies report said.

The paper pointed particularly to estimates by the Electric Reliability Council of Texas, which manages most of that state’s power grid. ERCOT forecast recently that meeting demand by 2030 would require adding generation capacity equal to 30 new nuclear plants. AI is spurring much of that growth as Texas pursues a plan to be the data-center hub of the country, if not the globe.

When Austin-based Treaty Oak Clean Energy CEO Christopher Elrod joined the power industry more than 20 years ago, demand growth was less than 1% per year. “I was looking at one report from one of the national labs recently, and they’re forecasting on the low side a 15%-plus compound annual growth rate to the end of this decade, which is just unprecedented.”

Elrod’s company held a groundbreaking ceremony last week for a 100-megawatt solar facility in Grant County, the Redfield Solar Project. The array will bring about 200 construction jobs to the Sheridan area, and two or three permanent jobs.

“We think we have a very meaningful contribution to make when we think about American energy independence and all of the forms of energy that we need to fulfill that need and support that growth.”

Elrod said in a teleconference interview last week that his company expects to benefit “from growth in AI power demand and data center growth, on one hand, and an accelerating electrification of industry happening across the country.

“Those two components really are driving up the demand forecasts that utilities are projecting,” Elrod said.

Hasten, of AECC, sought to put the numbers in context. The United States now uses about 4,000 terrawatt-hours of electricity. A terrawatt is 1 trillion watts, compared with a gigawatt (1 billion watts) and a megawatt (1 million watts). “The federal government believes that’s going to grow to 5,200 terawatt-hours by the year 2050,” Hasten said. That means Americans will be using about 30% more electricity 25 years from now.

Hasten said it took Arkansas cooperatives 80 years to reach a load of 3,000 megawatts. “And now I’ve got 4,000 megawatts that people would love to hook up in the next one, two, three, four years. That’s a pretty impossible task, right?

He said worldwide bitcoin makers now use about 172 terawatt-hours.

The rise of electric vehicles could add 100 terawatt-hours of U.S. load over five years, “and data centers about 200 to 300,” Hasten said.

Gas Plants Ahead

Both AECC and Entergy Arkansas, the state’s largest power company serving about 715,000 meters, face a generation gap beyond the demand surge. They’re co-owners of two major coal-burning power plants set to retire within five years: the White Bluff plant in Redfield and the Independence plant in Newark.

The cooperative and investor-owned Entergy are both planning new generation plants fueled by natural gas.

AECC, which serves about 600,000 members in Arkansas and bordering states, announced in August that it is building a 900- megawatt gas generation facility in Morris County, Texas. Construction should begin in mid-2026 on about 100 acres near Naples, in the transmission area of Southwest Power Pool, the grid operations nonprofit based in Little Rock. Hasten said the state-of-the-art asset will be one of AECC’s highest-performing and most efficient natural gas plants.Last month, he said gas-fired power plants are the fastest dispatchable power sources to build these days.

Entergy Arkansas has plans before the Arkansas Public Service Commission to build a new gas-powered generation plant on Lake Catherine near Hot Springs. It is also planning two other gas-fired plants, but no details are yet available, according to Matt Ramsey, Entergy’s communications manager.

Utilities nationwide are grappling with the load demand question, Ramsey said. “It’s established that many of these new data centers require significant amounts of electricity, often more than traditional industrial customers.”

But he said other sectors are also seeking more electricity.

“We believe the state is well-positioned to capture … these new economic development projects,” he said. “This growing demand from these different sectors will require us to build new generation in order to keep up with the economic growth opportunities for the state.”

Entergy does not have large data center customers presently, but it has added “significant new load in the past several years, including the steel industry in northeast Arkansas,” Ramsey said.

He said sister company Entergy Mississippi helped land one of the biggest economic development projects in its history a little more than a year ago.

Tech titan Amazon Web Services is putting one of its largest data center campuses in Mississippi, “totaling 1,000 new jobs and $10 billion in new investment,” Entergy Mississippi CEO Haley Fisackerly said.

The attraction for industry is simple, Fisackerly said. His utility’s rates are low and its reliability ratings high. Its “diverse mixture of nuclear, natural gas and renewable power has given Mississippi a big advantage in industrial recruiting,” he said.