Energy scarcity and heavy industry

There’s been so much focus on energy for data centers that it’s possible to forget that they’re not the only new large loads. A short report this week highlights a potential challenge for heavy industry – access to increasingly scarce affordable generation resources.

Industrial users have historically paid below-residential rates as a result of essentially “buying in bulk,” since their high, predictable demand and direct grid connection made them easier to serve. As data centers increasingly offer (at least the spectre of) prices above residential rates, new large loads in metallurgical or manufacturing industries - including sectors targeted for strategic reshoring - are increasingly concerned they’ll be outbid. Aluminum could seem like a straw man - it’s famously energy-intensive enough to earn the nickname of “congealed electricity,” but so are many other upstream commodities in the electro-tech stack, argues Seaver Wang of the Breakthrough Institute. Given the long timelines from investment to production - an aluminum facility takes about 5 years to build and bring online - it’s plausible that uncertainty now could cast a long shadow over what capital investments firms are willing to risk.